DXY: PPI in focus – OCBC

US Dollar (USD) extended its bullish run higher, with JPY, EUR, CHF and PHP the main underperformers. DXY was last at 98.55 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Bullish momentum on daily chart intact

"US CPI report was a trigger as USD shorts bailed. While the June core CPI print was slightly softer than estimates, the devil was in the details – which explained why the USD fell at first on data release but subsequently rebounded sharply after scrutinising the details. Several tariff-sensitive categories within core CPI – apparel, housing furnishings, auto parts, recreation goods – saw higher prints."

"This stoked the first signs that tariffs may be starting to show up in consumer prices, especially for goods. Markets will continue to question whether the disinflation trend in US is stalling, especially when considering the likely positive passthrough into core PCE. Adding to the mix, the Empire Manufacturing survey surprised to the upside (5.5 vs. -9.2 expected) with broad-based strength, further reducing the urgency for rate cuts."

"Markets now implied about 43bps of cut for the year (vs. about 48bps cut before CPI was released), lending support to the USD and bear in mind, we still have PPI data tonight, retail sales tomorrow and Uni. of Michigan data on Friday. Hotter print may well see USD short facing another round of squeeze. Bullish momentum on daily chart intact while RSI rose closer to overbought conditions. Resistance at 98.80 (50 DMA), 99.60 levels (23.6% fibo retracement of 2025 high to low). Support at 97.60/80 (21 DMA), 97.20 levels."