USD/CNH continued to drift lower, with strategists at a global bank keeping a negative bias and pointing to ongoing downside pressure. In the latest 24-hour view, the pair fell further than anticipated, sliding to 6.6559 before settling at 6.6564, a 0.07% drop. The framework still allows for a test of 6.6520, though a sustained move below that level was judged unlikely, while resistance was placed at 6.6605.
Over the 1–3 week horizon, the decline from 6.6655 has remained intact despite oversold conditions, after the pair reached a low of 6.6559. Attention is now on 6.6450 as the next downside level. On the topside, a break above 6.6640, described as strong resistance and previously set at 6.6700, would suggest the downward phase is no longer extending.
Derivative Trading Strategies for USD/CNH Downtrend
We advise derivative traders to align with the ongoing weakness in USD/CNH by taking short positions over the coming weeks. Purchasing put options or opening short futures contracts allows traders to target the projected decline toward 6.6450. Brief rallies toward 6.6605 present favorable entry points to establish or add to these downside positions.
Supporting Fundamentals and Risk Management
Strong fundamental backdrops support this move, as China’s annual trade surplus reached record levels near $1 trillion, driving persistent organic demand for the yuan. Additionally, historical currency data shows that when the dollar loses key support levels against the yuan, downward momentum tends to persist for several consecutive weeks. Narrowing US-China yield spreads further limit any meaningful upside recovery for the dollar in the near term.
Traders should maintain strict risk controls by placing stop-losses just above the 6.6640 resistance level. A breach of this barrier would indicate that downward momentum has faded, neutralizing the short bias. For short-term strategies, taking partial profits at the immediate 6.6520 support level helps secure gains while leaving room to capture the full move down to 6.6450.
