Insights 
VT 
The price action suggests the US Dollar could fall below 7.0860, with the next level to monitor being 7.0770. A breach of 7.1150 would indicate the decline in USD has eased, according to UOB Group’s FX analysts.
In the 24-hour view, yesterday’s expectation was for the USD to test 7.0860. It was believed a further decline was unlikely, but the USD dropped to 7.0886 before rebounding to close at 7.0980, a marginal increase of 0.04%. The downward pressure has lessened, and a range-trade between 7.0900 and 7.1080 is now expected.
1-3 Weeks View
For the 1-3 weeks view, the previous outlook remains unchanged, suggesting the USD could drop below 7.0860. The subsequent level to track after this is 7.0770. Only breaking above 7.1150 would indicate that the USD’s decline, which started in mid-October, has stabilised.
The current price action suggests the US Dollar could fall below the 7.0860 mark against the offshore Yuan. If this support level breaks, we will be watching for a further move down towards 7.0770. The bearish sentiment will only ease if the pair manages to climb back above the key resistance at 7.1150.
This potential for dollar weakness is reinforced by recent economic data. The latest US Consumer Price Index reading for September 2025 came in softer than expected at 2.8%, increasing speculation that the Federal Reserve may consider a rate cut in early 2026. This contrasts with the situation in China, where economic indicators are showing surprising resilience.
China’s economy appears to be on a firmer footing, with Q3 2025 GDP growth reported last week at 5.1%, beating market consensus. This positive momentum has been further supported by strong industrial production figures. This economic divergence is putting downward pressure on the USD/CNH pair.
Derivative Traders Outlook
For derivative traders, this outlook suggests positioning for a further drop. Buying put options with strike prices at or below 7.0860 could be a viable strategy to capitalize on the expected downward move. This approach offers a defined risk while providing exposure to potential declines toward the 7.0770 target.
From a risk management perspective, the 7.1150 level is critical. A decisive break above this point would indicate that the dollar’s decline has stabilized, invalidating the current bearish view. We would use this level as a point to reconsider short positions or to place stop-loss orders.
Looking back, this current downward pressure is a significant shift from the market dynamics we saw in 2023. At that time, the pair was trading at multi-year highs near the 7.35 level. The potential break below 7.0860 would confirm a continuation of the new, lower trading range established over the past year.
