DXY: 2-way risks persist – OCBC

FXStreet Insights Team FXStreet

The US Dollar (USD) saw a late comeback into Friday NY close as there appeared to be some disappointment with China stimulus. Trump's threat on tariff remains one of the biggest risks that markets are concerned about, but we do not know how long it takes for those policies to be in place after all, President inauguration only takes place on 20th Jan. DXY was last at 105.40 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

The focus is on US CPI on Wednesday

“And we do not know for sure if election threats/ promises become reality. Tariff risk and Trump policy uncertainty may keep USD supported on dips but in the event of a delay to implementing tariffs or even in the scenario it doesn’t materialise, then further unwinding of Trump trade may also be likely.”

“Daily momentum is showing a mild bearish bias while RSI fell. Support at 103.70/80 levels (21, 200 DMAs, 50% fibo retracement of 2023 high to 2024 low). Resistance at 105.60 levels (76.4% fibo).”

“This week, the focus is on US CPI on Wed. Consensus expects core to hold steady at 3.3% while headline CPI may come in higher at 2.6%. The uptick may raise doubts if Fed will still cut rates in Dec. But we expect Fed to cut in Dec amid cooling job market. Moreover, post-FOMC last week, Powell commented that the election will have no near-term effect on monetary policy decisions.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD extends its optimism past 1.1900

EUR/USD retains a firm underlying bid, surpassing the 1.1900 mark as the NA session draws to a close on Monday. The pair’s persistent uptrend comes as the US Dollar remains on the defensive, with traders staying cautious ahead of upcoming US NFP prints and CPI data.

GBP/USD hits three-day peaks, targets 1.3700

GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.

Gold picks up pace, retargets $5,100

Gold gathers fresh steam, challenging daily highs en route to the $5,100 mark per troy ounce in the latter part of Monday’s session. The precious metal finds support from fresh signs of continued buying by the PBoC, while expectations that the Fed could lean more dovish also collaborate with the uptick.

Litecoin eyes $50 as heavy losses weigh on investors

Following a strong downtrend across the crypto market over the past week, Litecoin holders are under immense pressure. The Bitcoin fork has trimmed about $1.81 billion from its market capitalization since the beginning of the year, sending it below the top 20 cryptos by market cap.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.

Ripple exposed to volatility amid low retail interest, modest fund inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.