DXY: Bearish but oversold – OCBC
06.03.2025, 09:12

DXY: Bearish but oversold – OCBC

US Dollar (USD) fell sharply. The narrative of US exceptionalism continues to fade as markets are increasingly focused on how Trump policies are hurting the US economy. Dollar Index (DXY) was last seen at 104.10 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note. 

Pace of decline is likely to moderate

"Overnight, Trump administration confirmed a 1-month delay for automakers from newly imposed tariffs on Mexico and Canada. USD moves so far have also somewhat mirrored the USD decline seen in 2017 post Trump 1.0."

"DXY broke below 200 DMA. Daily momentum turned bearish but RSI fell to near oversold conditions. Pace of decline is likely to moderate while we also do not rule out intra-day bounce. Resistance at 105/105.20 (50% fibo, 200 DMA), 106.35 (38.2% fibo retracement of Oct low to Jan high). Support at 104 (61.8% fibo), 103.40 and 102.50 (76.4% fibo)." 

"On US data, today brings initial jobless claims before payrolls report tomorrow. Softer US data may continue to add to USD woes. Later on Fri night, Powell will give a speech at the Chicago Booth’s US monetary policy forum. There will also be a Q&A session. It may be worth keeping a look out on any touchpoints he may have on US economic outlook or Fed policy, given the recent narrative on US facing stagflation risks."

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