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- DXY: Heavy bias but near oversold – OCBC
DXY: Heavy bias but near oversold – OCBC
Powell’s ‘time has come’ keynote speech last Fri at Jackson Hole gave markets greater conviction to put on risks while selling the USD. His speech was clear in establishing a rate cut cycle though he left out specifics in terms of magnitude and pace of cuts, OCBC FX strategists Frances Cheung and Christopher Wong note.
Clean break below puts 99.60 in focus
“Focus has clearly tilted towards supporting labour market and that policy decision remains data dependent. This puts greater focus on payrolls report (6 Sep) while this week, we have core PCE (Fri).
“DXY was last at 100.84. Bearish momentum on daily chart intact while RSI is near oversold conditions. Support at 100.60 levels. Clean break puts 99.60 in focus. Resistance at 101, 101.50 and 102.20 (23.6% fibo).”
“Over the weekend, geopolitical tensions escalated after Israel-Hezbollah were engaged in major missile exchange. While risk assets, except oil appeared immune at this point, it is worth taking a prudent stance to watch out for signs if geopolitical risks further escalate as this may temporary derail momentum seen in risk-on proxies and bearish USD (especially with RSI near oversold).”
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