The USD/CNY fix changed to 7.0968, down from 7.0995. The last recorded USD/CNH was 7.1270. The People’s Bank of China (PBOC) has been setting a stronger currency fix, averaging about 8 pips per day since April. This strategy aims to manage the RMB’s appreciation and supports the goal of internationalizing the RMB.

Important Days Ahead for USD/CNY Analysis

The upcoming days are crucial to see if the drop below 7.10 is temporary or a new trend. If USD/CNY falls below 7.10, it may affect other USD-Asia currencies (USDAXJs). The bullish momentum on the daily chart is weakening, shown by a declining Relative Strength Index (RSI). There are downside risks, with support at 7.1150 and 7.08, and resistance at 7.1330 and between 7.1420 and 7.1460. The central bank’s daily fix is pushing the Yuan to its strongest level since October 2024. This trend has been ongoing since April 2025, indicating a controlled strengthening of the currency. It suggests that authorities are comfortable with the current economic path and aim to project stability. This gradual appreciation fits with China’s goal to internationalize the RMB. Additionally, solid Q3 GDP data showed a 4.9% year-over-year growth. At the same time, lower inflation in the US, with September’s CPI at 2.8%, has eased expectations for more Fed rate hikes, putting pressure on the dollar. Upcoming trade talks in early November might also be affecting this gradual strengthening of the Yuan.

Bullish Momentum and Derivative Strategies

The bullish momentum for the US dollar is decreasing on the daily charts, and the RSI indicates a downward trend. This suggests that traders should consider strategies that account for possible declines in the USD/CNH pair in the coming weeks. Options like buying put options on USD/CNH or using bear put spreads could be wise to take advantage of a potential drop to the 7.08 support level. The key factor is the steady pace of about 8 pips per day, keeping implied volatility lower than the sharp spikes seen in 2015. This situation makes buying options a cost-effective way to prepare for a potential drop below the 7.10 level. If this gradual rise continues, strategies that benefit from low volatility, like selling out-of-the-money call spreads, could also be useful. It’s important to keep an eye on the 7.10 level in the next few days to determine if this is a lasting break or just a temporary dip. A consistent close below 7.10 could lead to a move towards the next significant support at 7.08. Resistance is currently at the 21-day moving average near 7.1330; movement above this level would challenge the bearish outlook. Create your live VT Markets account and start trading now.

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