The US Dollar (USD) may see a small decline against the Chinese Yuan (CNH), possibly testing the level of 6.9470. Analysts at UOB Group suggest that in the long run, the USD could drop to about 6.9400 due to mild downward pressure. Over the last 24 hours, the USD hit a low of 6.9498 but slightly recovered to close at 6.9565, showing a tiny change of 0.01%. This suggests a slight increase in downward momentum, but any decrease might stop around 6.9470. The main support level at 6.9400 is not expected to be tested, with resistance levels at 6.9600 and then 6.9650.

Short Term Analysis

In the next one to three weeks, the recent fall in the USD has only slightly increased its downward momentum. To keep this trend going, the USD needs to stay below the strong resistance level of 6.9750. This analysis comes from the FXStreet Insights Team, which shares insights from various financial experts. Looking back to early 2025, analysts noted that the dollar faced mild downward pressure against the yuan. This prediction proved right as the important levels like 6.9400 were broken mid-year. The dollar weakened due to a clear change in policy from the Federal Reserve in the second half of 2025. This downward trend in USD/CNH has continued into the new year, with the pair trading around 6.8550 today. The differing policies of central banks are the main reason for this, as the Fed has hinted at further easing while the People’s Bank of China remains stable. This policy gap supports continued strength for the yuan.

Strategic Trading Opportunities

Recent economic data backs this outlook for the coming weeks. China’s fourth-quarter 2025 GDP, released last week, showed a stronger-than-expected growth of 5.5%. In comparison, the latest US inflation report for December 2025 showed core CPI dropped to 2.1%, giving the Fed more flexibility to cut rates. In this environment, traders should look at strategies that benefit from limited gains in the USD/CNH pair. One effective approach could be selling out-of-the-money call options with strike prices around 6.9000 to earn premium. This strategy takes advantage of the belief that any increases in the dollar will be temporary and unlikely to exceed this psychological level. Create your live VT Markets account and start trading now.

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