The US Dollar is expected to stay within the range of 7.1000 to 7.1180. Long-term predictions indicate that the dollar’s earlier weakness has stabilized. Analysts from UOB Group forecast it will trade between 7.0920 and 7.1280. In the last 24 hours, the USD surged, hitting a peak of 7.1178, which went beyond expectations of it trading in the 7.0900 to 7.1080 range. This sharp rise seems excessive, and further increases are not anticipated. Instead, the dollar is more likely to consolidate within the tighter range of 7.1000 to 7.1180.

USD Currency Path

Recent analysis suggests that the USD might fall below 7.0860, unless it breaks above 7.1150, which is a critical resistance level. The unexpected rise past this level indicates that its weakness has leveled off. Moving forward, it is anticipated to range between 7.0920 and 7.1280. The FXStreet Insights Team shares selected market observations from experts, offering insights from both internal and external analysts. The recent spike in USD/CNH above the 7.1150 resistance has shifted our outlook. The dollar’s weakness seems to have stabilized, leading us to expect a range-bound trading environment. Derivatives traders should prepare for movement between 7.0920 and 7.1280 in the upcoming weeks. With this expected range, strategies that profit during low volatility, like selling an iron condor, may work well. Traders might consider selling call options with a strike price above 7.1300 and put options below 7.0900. This strategy capitalizes on time decay as long as the pair stays within this channel.

Economic Data and Market Impact

This outlook is backed by recent economic data. This week’s US Core CPI figure of 3.1% was slightly above expectations. This supports the Federal Reserve’s neutral stance, which limits any strong moves for the dollar. Meanwhile, China’s official manufacturing PMI remained steady at 50.1, indicating stability but not enough growth to strengthen the yuan significantly. Implied volatility for one-month USD/CNH options has decreased to multi-month lows, now around 4.2%. This low volatility makes selling premium appealing for traders who believe a consolidation period is likely. This marks a significant change from the market conditions in 2023-2024, when the pair frequently tested levels above 7.30 amidst higher uncertainty. Create your live VT Markets account and start trading now.

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