DXY: Core PCE in focus – OCBC
The US Dollar (USD) drifted a touch lower even as Trump threatened tariffs yesterday. Price action continues to show that USD bull momentum is feeling lethargic, and the highs seen last week lacked follow through. DXY fell; last at 106.46, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
“Stretched USD valuation, technical signals and potential December seasonality effect (DXY fell in 8 out of the last 10 Decembers) are some considerations for profit-taking on USD longs in the near term. We may need to see a flush out of USD longs before USD can resume its rise (at some point later). In the interim, we would look to US data for directional cues for USD.”
“Today brings 3Q GDP, core PCE, durable goods orders, Chicago PMI, initial jobless claims, personal income/spending. Firmer print will add to US exceptionalism narrative, keeping USD rates and USD elevated for longer, while softer print should add to USD unwinding momentum (i.e. USD may ease more). No US data for released on Thu and Fri due to Thanksgiving Day holidays.”
“Bear in mind that razor thin market liquidity may exacerbate choppy moves in FX market on any catalyst. Mild bullish momentum on daily chart is fading while RSI fell. Bearish divergence on daily MACD, RSI observed. Downside play likely. Support at 106.20, 105.40/50 levels (21 DMA, 38.2% fibo). Resistance at 107.40, 108.10 (recent high).”
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