Bulls face fatigue? – OCBC

The recent leg up in dollar index appears to show tentative signs of fatigue. DXY was last at 102.36, OCBC’s FX strategist Christopher Wong notes.

Daily momentum remains bullish

“Dovish bets on Fed cut trajectory have somewhat unwound. Markets are just eyeing about 50bp cut for the rest of the year, as opposed to 75bps cut seen just 2 weeks ago. Focus shifts to FOMC minutes, CPI (Thursday), PPI (Friday). Hotter print may bring back chatters of US exceptionalism and reinforces the view that Fed can slow pace of rate cut.

“This can be supportive of USD’s rebound momentum. Elsewhere, geopolitical tensions in middle east appears to have deteriorated. Brent has risen over 10% in the last few sessions. This further undermined FX, such as THB, KRW that are vulnerable to risk-off and surge in oil prices (net-oil importer).”

“Daily momentum remains bullish while RSI shows signs of turning lower from near overbought conditions. Retracement risk (lower) not ruled out in the interim. Support at 101.75/90 levels (50 DMA, 23.6% fibo retracement of 2023 high to 2024 low). Resistance at 102.90 (38.2% fibo).”