DXY: US holiday today – OCBC

US Dollar (USD) stays backfooted as core PCE came in largely in line with estimates. DXY last at 97.60 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Mild bearish momentum on daily chart intact

"Elsewhere, Chicago PMI slumped while University of Michigan sentiment and inflation expectations underwhelmed. On Fedspeaks, Fed’s Waller sees potential for jumbo 50bp cut if labour market weakens further. He currently backs 25bp cut but he said that his view could change if the employment report points to a substantially weakening economy and if inflation remains well contained."

"Daly reiterated openness to rate cut. She also said that Fed policymakers cannot wait for perfect certainty without risking harm to labour market. For now, markets are still pricing in 87% chance of 25bp cut at Sep FOMC and a total of about 55bps cut this year. Focus this week shifts to ISM manufacturing; JOLTS job openings report; ADP employment, ISM services, initial jobless claims and more importantly, NFP report."

"Softer data print may potentially change the narrative and weigh on USD. In particular, we will be on the look out for any pick-up in discussion for a jumbo 50bp cut at Sep FOMC. Mild bearish momentum on daily chart intact while RSI fell. Risk skewed to the downside in the interim. Support at 97.50, 97.10 levels. Resistance at 98.00/20 levels (21, 50 DMAs), 98.70 (100 DMA) and 99.60 (23.6% fibo retracement of 2025 high to low)."