DXY: Bears need softer CPI print – OCBC

US Dollar (USD) slipped overnight after PPI missed estimates (+0.2% m/m vs. 0.4% expected), OCBC's FX analyst Christopher Wong notes.

Bearish divergence appears on RSI

"Earlier report on Trump team considering a schedule of gradual tariffs increasing by about 2% to 5% a month also helped to support sentiments. Most non-USD FX rebounded while Dollar Index (DXY) eased but it remains to be seen if the recent move has legs. Admittedly, the idea of gradual tariff increase remains in the early stages for now. DXY was last seen trading at 109.25."

"Mild bullish momentum on daily chart intact but RSI eased. Broader bias remains skewed to the upside, but we do not rule out retracement play in the short term. Bearish divergence observed on RSI – we continue to monitor price action for confirmation. Support at 108.50 (21 DMA), 107.15 (50DMA). Resistance at 110.10, 110.90 levels."

"Focus today on CPI. We would need a much softer print to help to apply brakes on dollar. Failing which, another hot print should fuel USD higher."