The US Dollar is expected to trade between 6.9720 and 6.9920. Analysts from UOB Group believe that, because of oversold conditions and decreasing momentum, the downside may only reach around 6.9590. Recently, the US Dollar rose more than expected to 6.9915 but later fell back to close at 6.9827, showing a 0.17% gain. The upward momentum has slowed due to this pullback, and we anticipate it will stay within the proposed range today.

Current Market Conditions

In the upcoming weeks, UOB Group suggests that last month’s sharp decline seems excessive. Although there are no signs of stabilization yet, the oversold condition and declining momentum might limit any drop to 6.9590, provided that the resistance level of 6.9950 is not broken. The FXStreet Insights Team shares market observations from respected experts, including commentary from commercial notes and additional insights from both internal and external analysts. Currently, the US Dollar’s recent steep drop against the Chinese Yuan appears to be excessive. We expect the USD/CNH pair to stabilize and trade sideways for the next few weeks, likely in the range of 6.9720 to 6.9920. This prediction is backed by recent data showing a slight slowdown in China’s economic rebound. The Caixin Services PMI for December 2025 came in under expectations at 52.5, indicating that the strong momentum boosting the yuan might be slowing down. For derivative traders, this stable period is perfect for low-volatility strategies, such as selling out-of-the-money strangles.

Strategic Trading Opportunities

On the US side, the latest ISM Manufacturing PMI data shows that the sector is barely expanding, limiting the dollar’s potential for a strong rally. This follows the dollar weakness seen after the Federal Reserve’s dovish stance in November 2025. Mixed signals from both economies support the expectation of range-bound trading. A key level to watch is the 6.9950 resistance. If this price is broken decisively, it could indicate the end of the downward trend and trigger the closing of short positions. Traders might consider buying call options with a strike price just above this level in anticipation of a breakout. Conversely, although the downward momentum has lessened, further dips are likely to find solid support around the 6.9590 level. As we believe that a drop below this point is unlikely, traders could explore selling cash-secured puts or starting bull put spreads with a short strike at or just below 6.9590. This approach profits if the pair remains above this crucial support area. Additionally, actions from the People’s Bank of China indicate a preference for stability, and they set the daily reference rate to prevent excessive yuan strength. Historical data from 2023 and 2024 shows that after rapid movements, the central bank typically creates a calmer environment. This official guidance strengthens our expectation of a contained trading range in the near future. Create your live VT Markets account and start trading now.

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