The latest market trends indicate that the US Dollar (USD) sell-off may be reaching a turning point, according to insights from renowned OCBC FX strategists Frances Cheung and Christopher Wong.
Key Levels to Watch: 100.60 Support, 99.60 Target
Looking ahead, the focus shifts to upcoming economic data releases, including 2Q GDP on Thursday and core PCE on Friday. A stronger-than-expected print could slow down the USD’s downward trajectory, while a disappointing outcome could lead to further declines. However, factors such as month-end flows and geopolitical risks could introduce volatility into the market.
At present, the DXY is trading at 100.87, with bearish momentum evident on the daily chart and the RSI nearing oversold territory. Although a short squeeze cannot be ruled out, the overall bias is towards selling into any rallies. Additionally, a death cross formation has been observed as the 50-day moving average crosses below the 200-day moving average. Key support lies at the 100.60 level, with a decisive break opening the door to a test of the 99.60 mark.
On the upside, resistance levels to monitor include 101, 101.50, and 102.20, which corresponds to the 23.6% Fibonacci retracement level of the move from the 2023 high to the 2024 low.
Expert Analysis and Outlook
As the USD navigates through a period of heightened volatility, investors are advised to keep a close eye on key support and resistance levels. The upcoming economic data releases will play a crucial role in shaping the currency’s direction in the near term. Traders should remain vigilant of potential market distortions caused by external factors such as month-end flows and geopolitical developments.
Overall, the USD’s performance in the coming days will be closely watched by market participants, with the potential for significant moves in either direction depending on the outcome of key economic indicators. Stay tuned for further updates on this evolving situation.