The US Dollar (USD) is predicted to trade between 7.1180 and 7.1310 against the Chinese Yuan (CNH), say UOB Group’s FX analysts Quek Ser Leang and Peter Chia. They note that if the USD drops to 7.1130, a clear break below that level could lead to a focus on 7.1000. In recent trading, the USD ranged from 7.1161 to 7.1268, closing slightly higher at 7.1268, indicating very little movement. Today’s trading is expected to stay within the 7.1180 to 7.1310 range.

Market Outlook

Over the next 1-3 weeks, the USD may drop further to 7.1130 if it breaks current levels. However, this depends on the strong resistance at 7.1400 not being broken. The FXStreet Insights Team, made up of journalists, gathers market insights from experts and analysts to provide a broad view of market trends and forecasts. The USD/CNH exchange rate is expected to trade sideways in a tight range between 7.1180 and 7.1310 for now. This suggests a period of consolidation before a more decisive move. We see pressure building for a move lower, targeting 7.1130 in the coming weeks. Given this outlook, we are considering buying put options on the USD/CNH pair with strike prices just below the current trading range. A clear break below 7.1130 would shift our focus to the psychological support at 7.1000. This strategy positions us for a downward move while keeping our risk defined in case strong resistance at 7.1400 is breached.

Economic Indicators

Our negative view on the dollar is supported by recent economic data. The latest US inflation numbers for September 2025 came in slightly lower than expected, leading markets to lower bets on further tightening from the Federal Reserve this year. This mirrors late 2023, when cooling inflation caused significant dollar weakness. On the yuan’s side, sentiment has improved after China’s Q3 2025 industrial production figures showed unexpected resilience, surpassing forecasts. The People’s Bank of China has kept a steady approach, boosting investor confidence. This marks a shift from the growth concerns that were prevalent a couple of years ago. For traders who prefer a cautious approach, selling out-of-the-money call spreads may be wise. By positioning the short strike above the key 7.1400 resistance level, this strategy profits if the pair stays range-bound or moves lower. It allows us to collect premium while waiting for the expected downward trend to develop. Create your live VT Markets account and start trading now.

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