DXY: Powell sets a dovish tone – OCBC
|Recent rise in US Dollar (USD) was stopped in its track. DXY last at 98.81 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.
Bullish momentum on daily chart shows signs of fading
"Fed Chair Powell sounded dovish in his speech, warning about sharp slowdown in job creation. He also spoke about putting a stop to reducing the size of Fed balance sheet soon. To add, USD/CNY fix was set below 7.10 this morning – first time in 11 months. This helped to anchor sentiments in AXJs."
"And overnight, there seemed to be some breakthrough in French impasse after PM Lecornu agreed to reverse the proposed increase in retirement age – helping to lift EUR. We continue to expect USD to trade moderately softer as Fed resumes easing while US exceptionalism fade. For USD bears to return with more conviction would require US data to come in softer (when data gets released), alongside Fed easing rates more decisively."
"Bullish momentum on daily chart shows signs of fading while RSI fell from overbought conditions. Pullback is not ruled out in the interim. Support at 98.40 (38.2% fibo) and 98 levels (21, 50 DMAs). Immediate resistance at 99.10 levels (50% fibo retracement of May high to Sep low), 99.80 (61.8% fibo), 100.20 levels."
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