DXY: The narrative will be driven by Fedspeaks – OCBC

This week is a busy week of Fedspeaks. DXY was last at 100.84, OCBC FX strategists Frances Cheung and Christopher Wong note.

Mild bullish momentum on daily chart

“About 11 separate occasions where multiple Fed officials will air their views, including Powell's pre-recorded speech on Thursday. But last night, for those who spoke, they largely sounded somewhat dovish. For instance, Goolsbee said rates need to be lowered significantly to protect US labour market and the economy and he looks for many more rate cuts over the next year.”

“He also said that current level of interest rates is hundreds of bps above neutral rate. Bostic said large cut supports labor market but pace is not set. Alongside mixed prelim PMI report out of US overnight, the USD still trade mixed while risk-on sentiments remain intact for now (partly supported by China’s stimulus announced this morning).”

“Mild bullish momentum on daily chart intact while RSI rose. Interim double-bottom appears to be forming – this suggests an interim base. USD may drift slightly higher intra-day. Resistance at 101.20 (21 DMA), 101.90. Support at 100.20/50 levels (interim double bottom). This week, we will also watch core PCE (Fri).”