The US Dollar (USD) is expected to dip against the Chinese Yuan Renminbi (CNY), but it is unlikely to fall below the support level of 6.9520. Analysts from the UOB Group predict that the USD will mostly trade between 6.9520 and 6.9900 for an extended period. In the short term, the UOB Group foresees the USD fluctuating between 6.9650 and 6.9770. It recently reached a peak of 6.9738 before dropping to 6.9614. While it may continue to decline slightly, dropping below the 6.9520 support level seems unlikely. Resistance points are set at 6.9680 and 6.9750.

Broader Perspective

Looking at the bigger picture, the outlook for the USD has been neutral since last week. On January 13, when the spot rate was 6.9710, it was expected that the USD would stay within the range of 6.9520 to 6.9900. This view has remained stable. The FXStreet Insights Team gathers expert reports and assessments, mixing insights from both internal and external analysts to provide a thorough understanding of the market. Reflecting on the analysis from January 2025, the consensus was a neutral stance, anticipating a tight trading range for USD/CNH between 6.9520 and 6.9900. This view came after a period of low volatility due to actions from monetary authorities. The main takeaway was the strength of the support at 6.9520.

Current Situation

Fast forward to today, January 16, 2026, and the situation has changed, with the pair now trading around 7.1550. This shift follows China’s reported Q4 2025 GDP growth of 4.8%, which was slightly below expectations. This led the People’s Bank of China to modify its daily fixing mechanism, clearly breaking away from the old range. As a result, the low-volatility environment of early 2025 has faded, requiring a change in strategy. One-month implied volatility has increased from about 4% last year to 5.5% today. This indicates that the market anticipates larger price fluctuations in the upcoming weeks. In light of this, selling options for premium, which was a safe strategy in last year’s range, now carries high risks. Instead, it may be better to explore options that could benefit from potential price increases, like buying call spreads targeting the psychological level of 7.2000. This approach helps define our risk while positioning for further USD strength. It is now wiser to hedge against potential gains rather than bet on a return to last year’s levels. Close attention should be paid to upcoming US inflation data and China’s trade balance, as these could significantly influence market trends. The previous support at 6.9520 has now become a distant memory in today’s market. Create your live VT Markets account and start trading now.

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