US Greenback (USD) continued to commerce close to latest lows as markets navigate greater oil costs owing to geopolitical tensions, tariff uncertainties and central financial institution conferences this week. Greenback Index (DXY) was final at 98.17 ranges, OCBC’s FX analysts Frances Cheung and Christopher Wong be aware.
Focus this week is on FOMC
“USD’s bounce on Friday owing to geopolitical escalation proved short-lived as ‘promote USD’ commerce got here again with a punch. EUR broke above 1.16-handle briefly in a single day, AUD and NZD reclaimed 0.65, 0.60 deal with and in AxJ area, TWD strengthened. Gold costs eased in a single day as tensions appeared to ease barely. Trump yesterday mentioned that Iranian officers referred to as him to debate the scenario. However this morning, Trump mentioned ‘everybody ought to instantly evacuate Tehran’. He additionally hinted to reporters that there could be extra developments within the Center East as quickly as he leaves the G7 assembly (to return to US).”
“White home officers simply indicated a proposal this week with Iran on subjects regarding nuclear deal and ceasefire. Geopolitical improvement stays fluid and deserves additional monitoring. De-escalation would possible weigh on the greenback and produce help again to threat proxies but when tensions worsen, high-beta FX corresponding to AUD and NZD could commerce on the again foot. Additionally, oil costs could threat going greater ought to tensions worsen dramatically. This may increasingly dampen the momentum in some AxJ FX, particularly internet oil importer FX, together with INR.”
“Each day momentum has a gentle bearish bias however RSI exhibits indicators of rising from close to oversold circumstances. Resistance at 99 ranges (21 DMA), 99.60 (50 DMA). Help at 97.60 (latest low). Focus this week is on FOMC (Thursday 2am SGT). Established order possible, however all eyes on the dot plot and press convention. Markets search for 2 cuts by yearend. If the Fed alerts only one minimize (final dot plot seems to be for two minimize) or pushes again easing expectations, then USD might get one other elevate, however something much less hawkish/extra dovish might set off USD promoting.”
