The US Dollar (USD) against the Chinese Yuan (CNH) may not drop below the year-to-date low of 7.0860. Analysts note that while the risk for the USD is on the downside, momentum to break this level is unclear.<\/p>\n
In the past day, the USD dropped to 7.1029 before stabilising to close at 7.1095, marking its largest decline in two months. Although conditions seem oversold, further dips below 7.1000 could occur before a recovery is seen.<\/p>\n
Over the next one to three weeks, the USD’s recent low suggests ongoing downward pressure. However, breaking the year-to-date low of 7.0860 remains uncertain. A breach of the 7.1280 resistance could signal eased downward pressure.<\/p>\n
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We see the US Dollar facing downside risk, but it is unclear if there’s enough push to break the year-to-date low of 7.0860. The pair is currently oversold after its biggest one-day drop in two months. This suggests that while the trend is down, a bounce or consolidation is possible before the next major move.<\/p>\n
This downward pressure on the dollar is supported by recent economic data. For instance, the latest US inflation figures for September 2025 came in at 2.8%, slightly below forecasts, reducing pressure on the Federal Reserve to be hawkish. Meanwhile, China\u2019s Q3 GDP growth of 4.9% showed signs of economic stabilization, lending strength to the yuan.<\/p>\n
For derivative traders, this suggests strategies that profit from the pair failing to break key levels in the coming weeks. We believe selling put options with strike prices below the 7.0860 support level could be a viable approach, capitalizing on the view that this floor will hold. This strategy benefits from time decay and volatility contraction if the pair stabilizes.<\/p>\n
Alternatively, given the strong resistance noted at 7.1280, a bear call spread could be considered. This position would profit if the pair stays below this level, aligning with the idea that any upward correction will be limited. Looking back, the volatility we saw in 2023 when the pair was above 7.30 makes these current levels significant psychological points for the market.<\/p>\n
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