DXY: Short squeeze on the day – OCBC

FXStreet Insights Team FXStreet

Dollar Index (DXY) extended its rise this morning. DXY last at 99.87, OCBC's FX analysts Frances Cheung and Christopher Wong note.

2-way trades likely to persist

"Fed Chair Powell’s comments post-FOMC – that December meeting is not a foregone conclusion provided the excuse for markets to unwind USD shorts. Looking on, the absence of US data due to government shutdown as well as a less committal and divisive Fed will likely allow for USD short squeeze to transpire in the near term."

"In addition, market expectations of Fed cut for 2026 may be overly priced for now, and any continued pare back in expectations may result in further USD upticks. This week brings ISM mfg (Monday); ADP employment change, ISM services (Wednesday). Payrolls data initially scheduled for Friday will likely be deferred until BLS announces details. Markets are likely to scrutinise Fedspeaks and US corporate earnings to get a sense of economy well-being."

"Daily momentum turned mild bullish while RSI rose. 2-way trades likely to persist, with slight bias to upside. Resistance at 100.50/60 levels (200 DMA, 76.4% fibo). Support at 99.10 levels (50% fibo retracement of May high to Sep low), 98.40 (38.2% fibo) and 98.00/20 levels (50, 100 DMAs) and 97.60 (23.6% fibo)."

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 keeps the rangebound trade near 1.1850

EUR/USD is still under pressure, drifting back towards the 1.1850 area as Monday’s session draws to a close. The modest decline in spot comes as the US Dollar picks up a bit of support, while thin liquidity and muted volatility, thanks to the US market holiday, are exaggerating price swings and keeping trading conditions choppy.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

Gold battle around $5,000 continues

Gold is giving back part of Friday’s sharp rebound, deflating below the key $5,000 mark per troy ounce as the new week gets underway. Modest gains in the US Dollar are keeping the metal in check, while thin trading conditions, due to the Presidents Day holiday in the US, are adding to the choppy and hesitant tone across markets.

AI Crypto Update: Bittensor eyes breakout as AI tokens falter

The artificial intelligence (AI) cryptocurrency segment is witnessing heightened volatility, with top tokens such as Near Protocol (NEAR) struggling to gain traction amid the persistent decline in January and February.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.