Overnight, the markets experienced a lack of activity, as both the US and UK markets were closed for a public holiday. According to Frances Cheung and Christopher Wong, OCBC’s FX analysts, the DXY was last recorded at 99.29 levels. They also noted that while daily momentum shows signs of turning mildly bearish, the decline in RSI suggests some moderation. They believe that there may be a consolidation during intra-day trading, and point out that the next support level is at 97.90 (the 2025 low) and 97.40 levels. On the other hand, resistance can be expected at 100.1 (21 DMA) and 100.80 (23.6% fibo retracement of 2025 peak to trough).
The uncertainty surrounding tariffs has resurfaced after President Trump’s recent threat to impose tariffs on the EU (although it has been delayed) and smartphone makers. It is unclear if tariffs on pharmaceutical and semiconductor products are still on the horizon. Two weeks ago, Trump also stated that the US will send letters to some of its trading partners to unilaterally impose new tariff rates in the upcoming weeks. It is uncertain if these new rates will be in addition to the previously announced tariffs or if they will replace them. The unpredictability of Trump’s trade policies, along with the increasing debt and deficit, are some US-specific risks that may continue to weaken confidence in the USD.