Consolidation on books – OCBC

The US dollar (USD) sell-off shows signs of stabilizing as the Jackson hole excitement plays out, note OCBC FX strategists Frances Cheung and Christopher Wong.

Clean break of 100.60 puts 99.60 in focus

“This week, Q2 GDP (Thursday) and Core PCE (Friday) will be the highlight. The firmer print could slow USD’s bearish momentum, but another disappointing print should re-expose the USD to further downside. That said, month-end flows, geopolitical risks can distort price action.”

“DXY was last at 100.87. Bearish momentum on the daily chart is intact, while the RSI is near oversold conditions. Do not rule out the risk of shorting, but bias to fade rallies. The death cross observed as the 50DMA reduces the 200DMA to the downside. Support here at 100.60 levels. Clean break highlights 99.60.”

“Resistance at 101, 101.50 and 102.20 (23.6% fibo retracement from 2023 high to 2024 low).”