The US Dollar (USD) traded lower last Fri post-release of payrolls, unemployment report. But subsequently traded higher into NY close. DXY was last at 105.95 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
“There were a handful of Fedspeaks last Friday post-NFP, and officials like Bowman, reiterated gradualism in pace of lowering rates but she also said that it is hard to think interest rates are restrictive right now. Another FOMC member, Hammack believes that Fed is ‘at or near’” the point where Fed should slow rate cut. Goolsbee also echoed the view that pace of rate cuts will probably slow next year. Fedspeaks go into blackout so that puts the focus on data before FOMC next Thu (19 December).”
“This week, we have CPI on Wednesday and PPI on Thursday. A 25bp cut is more or less a done deal for December meeting unless US CPI unexpectedly surprises a lot to the upside. We would be keen to see the dot plot guidance for 2025. Fed fund futures are implying about 3 cuts for 2025, slightly less than the previous dot plot of 4 cuts that was penciled in for 2025.”
“Daily momentum is mild bearish while RSI fell. Head and shoulders pattern appears to have formed with DXY testing the neckline (which was respected on Friday). This is typically a bearish setup. A decisive break below neckline should see bears gather momentum. Support at 105 levels (38.2% fibo retracement of Sep low to November high), 104.60 (50 DMA) and 104.10 (200 DMA, 50% fibo). Resistance at 106.20/30 levels (23.6% fibo, 21 DMA), 106.70 (second shoulder).”