DXY: In consolidation following the sharp drop – OCBC

FXStreet Insights Team FXStreet

US Dollar (USD) turned sharply lower on release of payrolls report last Fri. Most USD/Asean FX was also trading lower this morning, catching up on the USD pullback. DXY was last at 98.80 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Risks skewed to the downside

"THB, PHP and MYR gained over 1% vs. USD. US NFP headline print of 73k missed expectations (104k) while downward revisions for the last 2 months (-258k) caught markets by surprise. Nevertheless, this alongside the slump in ISM employment (43.4) point to softening labour market."

"Markets were just positioning for a potential return of US exceptionalism trade, but the soft labour market print suggests that the return of US exceptionalism trade may well be a back burner. Fed fund futures are now suggesting that a Sept rate cut should not be ruled out. Focus this week on ISM services data (Tuesday); initial jobless claims (Thursday) and Fedspeaks."

Bullish momentum shows signs of fading while RSI fell. Risks skewed to the downside. Support at 98.30 (21, 50 DMAs), 97.20 levels. Resistance at 100 (100 DMA), 100.50 levels.

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FXStreet Insights Team

FXStreet

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