Strong bias but almost oversold – OCBC

Powell’s keynote speech last Friday in Jackson Hole, “the time has come,” gave markets more conviction to take risks while selling the USD. His speech was clear in setting out a rate cut cycle, although he omitted some details on the scale and pace of cuts, note OCBC FX strategists Frances Cheung and Christopher Wong.

Clean break below highlights 99.60

“The focus has clearly shifted towards supporting the labor market and this policy decision remains data dependent. This puts more emphasis on the wages report (September 6), while this week we have core PCE (Friday).

“DXY was last at 100.84. Bearish momentum on the daily chart is intact, while the RSI is near oversold conditions. Support at 100.60 levels. Clean break highlights 99.60. Resistance at 101, 101.50 and 102.20 (23.6% fibo).”

“Over the weekend, geopolitical tensions escalated after Israel-Hezbollah engaged in a major missile exchange. While risk assets, with the exception of oil, have appeared immune at the moment, it is worth taking a cautious stance to watch for signs should geopolitical risks escalate further, as this may temporarily derail the momentum seen in benchmarks. risk and USD (especially with RSI almost oversold). ).”