USD softens after payrolls – OCBC

US Dollar (USD) eased around the November payrolls report, which highlighted ongoing labor market weakness but lacked the severity to shift rate cut expectations, keeping the Fed’s easing bias intact ahead of Thursday’s CPI release. Dollar Index (DXY) was last seen around 98.58 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Fed easing bias remains intact

“USD traded somewhat offered around the release of payrolls data but subsequently pared losses into NY close. Report continued to point to further weakness in labour market, reinforcing Fed’s easing bias. That said, the report was mixed and not dramatically weak enough to add to rate cut expectations. Markets still implied only 24% probability of a Jan cut while markets expectation for cumulative cut for 2026 was largely stable at -58bps.”

“Focus now shifts to Nov CPI report scheduled for release on Thursday. Another underwhelming print should weigh on USD. On Fedspeaks overnight, Goolsbee told CNN in an interview that he is pretty optimistic that the economy will sustain at a stabilized rate that’s pretty decent, and if it can do that and inflation is headed down to something like 2%, I think rates can go down.”

“Bearish momentum on daily chart intact while RSI fell to oversold conditions. Some consolidation is not ruled out in the interim. Support at 97.90, 97.60 (23.6% fibo). Resistance at 99.10/20 levels (21, 50, 200 DMAs, 50% fibo retracement of May high to Sep low) and 99.80 levels (61.8% fibo).”