DXY: Plenty of US data this week – OCBC

US Dollar (USD) held on to mild gains, amid rise in UST yields and ahead of US CPI (Tuesday). DXY was last at 97.9 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Bullish momentum on daily chart intact

"Trump announced tariffs over the weekend – 30% on all imports from Mexico and the EU (wef. 1 August) somewhat weighed on risk proxies. US and European futures were down while Asian equities traded mixed this morning. Asian and high-beta FX were largely trading on the back foot with NZD, AUD, PHP and IDR leading losses while precious metals were firmer."

"Bullish momentum on daily chart intact but rise in RSI moderated. We continue to caution for the risk of mild USD rebound in the near term but look for opportunities on rally to fade into. US data this week – CPI (Tuesday); PPI (Wednesday); retail sales (Thursday); Uni of Michigan sentiment (Friday) in focus. Any slippage in data may serve as a good entry point to fade this USD bounce."

"Overall, we still expect USD to trade weaker as USD diversification/ re-allocation trend, Fed cut cycle take centre-stage. US policy unpredictability, and concerns of about the rising trajectory of debt and deficits in the medium term should continue to underpin the broad (and likely, bumpy) decline in the USD."