DXY: Consolidation on the day – OCBC

The US Dollar (USD) bulls show signs of fatigue even as better US data last Fri did not fuel further USD upticks. DXY was last at 106.52 levels, OCBC FX analysts Frances Cheung and Christopher Wong notes.

Potential bearish divergence forming on daily MACD

“In response to better-than-expected US data and less dovish rhetoric (from Powell), markets have already scaled back probability of 25bp cut in Dec meeting to ~65% chance (vs 71% chance a week ago). Prospects of Fed cut will continue to adjust as US data comes. This puts focus on data this week: prelim PMIs, Uni of Michigan sentiment data (Fri) before core PCE (27 Nov).”

“Firmer print will add to US exceptionalism narrative, keeping USD rates and USD elevated for longer, until the trend turns. Bullish momentum on daily chart moderated while rise in RSI slows near overbought conditions.”

“Potential bearish divergence may be forming on daily MACD, but price action requires further monitoring. Near term, not ruling out a technical retracement. Support at 106.50, 105.60 (76.4% fibo) and 104.50/60 levels (21DMA, 61.8% fibo retracement of 2023 high to 2024 low). Resistance at 107, 107.40 (2023 high).”