Insights 
VT 
A slight increase in downward momentum suggests the US Dollar (USD) might test the 7.1200 mark against the Chinese Yuan (CNH), though a sustained drop below this level is seen as unlikely. Downward momentum is beginning to build, but for further declines to occur, USD must consistently remain below 7.1200, according to analysts from UOB Group.
In the short term, the USD is anticipated to trade between 7.1300 and 7.1450, previously reaching a high of 7.1429 and a low of 7.1250. Any break below 7.1200 is possible, yet not expected to last with resistance at 7.1330 and 7.1400. Over the next one to three weeks, USD is forecasted to fluctuate between 7.1200 and 7.1550. The possibility of a firm break below 7.1200 persists as long as the strong resistance level of 7.1460 remains intact. The following support after 7.1200 is noted at 7.1130.
Downward Momentum and Key Support
Downward momentum in the US dollar against the yuan is increasing, bringing the key 7.1200 support level into focus. While a test of this level is probable, we believe a sustained break below it is unlikely in the immediate future. Resistance can be found at 7.1330 and more significantly at 7.1400.
This dollar weakness is partially fueled by recent US economic data, as the September 2025 inflation report showed a continued cooling trend with a year-over-year reading of 2.9%. Consequently, market pricing now reflects a greater than 60% probability of a Federal Reserve rate cut in the first quarter of 2026. This has capped the dollar’s potential upside against most currencies, including the yuan.
On the other side of the pair, China’s third-quarter GDP for 2025 came in slightly above expectations at 4.8%, lending modest strength to the yuan. This economic stability, coupled with a resilient industrial sector, suggests the People’s Bank of China has room to maintain a steady policy. This backdrop supports the yuan and adds pressure on the USD/CNH pair.
Strategic Trading Opportunities
Given the strong support at 7.1200, we see opportunities in selling cash-secured puts with strike prices at or just below this level, expiring in two to three weeks. This strategy collects premium based on the view that this floor will hold firm against the current downward push. The primary risk to this trade would be a close below 7.1200 for more than two consecutive days.
Alternatively, for those anticipating a slight dip but not a major breakdown, a bear put spread is a viable option. Traders could buy a put with a 7.1300 strike and simultaneously sell a put with a 7.1150 strike. This defined-risk strategy profits from a drift lower but protects against a sharp, unexpected reversal.
We must remember the trading ranges of the past, especially the sustained periods the pair spent above 7.2500 back in late 2023 and early 2024 from our current perspective. The current price action below 7.1500 highlights a significant shift over the last year. If the 7.1200 support holds as expected, a reversion toward the 7.1460 strong resistance level is a distinct possibility.
