The USD/CNH has continued to fall, breaking below the bottom line of a downward channel. This currency pair could soon reach targets at the channel’s lower edge, between 7.01 and 7.00, with a potential low near 6.97 in 2024.
There may be a short-term bounce, but it will face resistance around the 50-day moving average (DMA) near 7.09/7.10. Additional information from FXStreet highlights trends in other markets: Chinese crude oil processing rose by 4% year-on-year in November, while EUR/USD is near its highest point since October. Gold prices are under pressure due to a delayed US non-farm payroll (NFP) report.
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The US dollar is weakening against the Chinese yuan, having dropped below a crucial technical channel. This confirms the bearish trend we’ve been observing for months and suggests further declines are likely. Recent data for November 2025 showed that China’s industrial production grew by 4.8% year-over-year, surpassing forecasts and lending strength to the yuan.
We expect the pair to move toward the 7.01/7.00 level in the coming weeks, a target that seems very achievable. This expectation is backed by the recent US inflation report for November 2025, showing Core CPI dropping to a 2.5% annual rate, increasing the chances of a Federal Reserve rate cut in the first quarter of 2026. Derivative traders may want to consider buying puts or taking bearish positions aimed at these lower levels.
Market Trends and Currency Changes
While the recent downturn looks extreme, there are no indications of a reversal yet. This suggests that any bounce will likely be short-lived. The 50-day moving average near 7.09 should provide strong resistance to any temporary recovery of the dollar. Selling weekly call options with strike prices above 7.10 could be an effective way to take advantage of this resistance.
Looking back, the move toward the 7.00 level marks a big change in market dynamics. It’s important to remember that the pair spent much of 2023 and 2024 firmly above the 7.20 mark. Retesting the low from 2024 near 6.97 is now a real possibility before the end of the first quarter of 2026.
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