The US Dollar (USD) is expected to stabilize between 7.1780 and 7.1980. Looking further ahead, it seems to have entered a trading range of 7.1600 to 7.2240. In the last trading session, the USD was expected to move between 7.1800 and 7.2000. Instead, it fluctuated between 7.1836 and 7.1953, a narrower range than predicted. In the coming weeks, we think the USD will continue to trade within the 7.1600 to 7.2240 range. This view has remained consistent over the last few days. It’s important to note that forward-looking statements carry risks and shouldn’t be seen as investment advice. Always do your own research before making financial decisions, as open markets can be very risky. We’re seeing the US Dollar settle into a routine against the yuan. In the upcoming weeks, we anticipate that trading will stay within 7.1600 to 7.2240. This suggests a period of low momentum, making it challenging for trend-following strategies. This outlook is supported by the market’s recent calm movements, which have been even steadier than we expected. The Cboe/CME FX Yuan Volatility Index dropped to 4.2% late last week, the lowest since March 2025. This low number indicates that the options market isn’t expecting big price swings. Given this stability, strategies that benefit from limited movement seem promising. Selling options, like creating short strangles or iron condors within this expected range, could be a smart move. These strategies gain from time decay as long as the dollar stays within the set limits. Reflecting on the past, this calm period reminds us of the tight ranges we saw throughout 2023 when central bank policies helped keep volatility down. However, unlike the slow upward trend we observed back then, the current market shows signs of true consolidation. This suggests that a breakout is less likely now than in previous years. Recent economic data from both the U.S. and China supports this sideways view. The U.S. July jobs report released last Friday showed steady but not outstanding growth, giving the Federal Reserve little reason to change its neutral position. At the same time, Chinese inflation figures remain low, promoting continued currency stability.

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