US Dollar: Consolidation with two-way risks – OCBC

OCBC strategist Christopher Wong notes the US Dollar Index (DXY) around 99.5, supported by higher Oil, elevated UST yields and softer risk sentiment. He highlights tentative bullish daily momentum and two-way risks, with resistance near 99.80–100.30 and support around 99.30–98.00. Wong adds that further US Dollar (USD) upside likely requires the Fed to keep open the option of additional tightening.

Dollar index holds firm on supports

"USD rebounded sharply, supported by another rise in oil prices, elevated UST yields and a softer risk backdrop. Brent pushed back above $108/bbl as concerns over Middle East supply disruptions resurfaced, while the 10y UST yield crossed 5%, keeping rate support for the USD intact. Risk sentiment was also softer, led by declines in AI-related equities following renewed calls from industry leaders to slow the pace of AI development. The combination of higher oil, high US yields and weaker risk appetite helped lift the USD broadly."

"USD firmed on combination of higher oil, elevated UST yields and Fed hike expectations. Near-term support may persist, but with a hike now heavily priced, further USD upside likely needs the Fed to keep the door open to additional tightening."

"DXY last at 99.5 levels. Daily momentum shows tentative signs of turning mild bullish while RSI rose slightly. 2-way risks likely to persist. Resistance at 99.80/ 100 levels (50, 100 DMAs), 100.3 (23.6% fibo). Support at 99.30/40 levels (21DMA, 38.2% fibo), 98.60/70 levels (50% fibo retracement of 2026 low to high), 98 (61.8% fibo)."

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