The US Dollar (USD) against the Chinese Yuan (CNH) is expected to trade between 7.0620 and 7.0740. This prediction comes from FX analysts at UOB Group, who foresee a negative trend for the USD in the long run, with the next important level being 7.0400.
In the next 24 hours, momentum indicators show little change. The USD is likely to continue trading within the 7.0620 to 7.0740 range, having closed at 7.0715, with a tighter range of 7.0659 to 7.0726.
For the next 1-3 weeks, the negative outlook for the USD stays the same as long as it doesn’t break above the resistance level of 7.0770. Although the dollar hasn’t declined recently, analysts believe it may still head towards 7.0400.
Currently, the dollar’s movement is steady, and we expect it to remain within the 7.0620 to 7.0740 range. This indicates low volatility, making it a good time to explore strategies like selling straddles that benefit from stable conditions. Traders should closely monitor these levels for any potential breakouts.
Even with the present calm, our view for the next one to three weeks is still negative for the US dollar, focusing on the 7.0400 support level. This view is supported by recent US inflation data from November 2025, which was lower than expected at 2.8%, reducing pressure on the Federal Reserve. On the other hand, China’s industrial output has shown unexpected strength, boosting the yuan.
We will keep this negative outlook as long as the dollar remains below the strong resistance at 7.0770. If it breaks above this level, it may indicate that downward pressure is easing, which would require a reassessment of short positions. Derivative traders might use the 7.0770 level to manage their risk, such as setting call option strike prices to hedge against bearish bets.
Looking back at similar quiet periods, like in the third quarter of 2024, low volatility typically precedes significant policy-driven movement. The market currently expects the Federal Reserve to maintain its course in the upcoming meeting, but any surprises could lead to a sharp movement away from the current range. Therefore, while range-trading strategies may seem appealing now, traders should be ready for a potential increase in volatility.
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