DXY: Pace of decline may moderate – OCBC

USD’s pace of decline somewhat moderated overnight, in response to better-than-expected US data – ISM manufacturing, prices paid, JOLTS job openings. DXY was last at 96.90 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Mild bearish momentum on daily chart intact

"At the ECB forum in Sintra yesterday, Fed Chair Powell said that Fed will take a prudent approach to 'wait and learn more' about the impact of tariffs on inflation before lowering rates as long as the US economy is in solid shape. He further said that Fed would likely have continued to gradually lower rates this year if not for concerns that tariffs might derail inflation fight. When asked about a July cut, Powell said he 'wouldn’t take any meeting off the table or put it directly on the table'."

"So, while Powell did leave the door open to cuts, he maintains optionality in not committing to any time frame – largely the same stance he had communicated before. On the One Big Beautiful Bill Act (OBBBA), Senate voted 51-50 to pass the bill. Congressional Budget Office (CBO) has revised its estimate for the amended budget bill, projecting it will add $3.3 trillion to the national debt over the next decade, up from the previous $2.8 trillion estimate for the House version."

"This larger debt projection raises concerns about the medium-term trajectory of US debt and deficits, reinforcing the narrative to 'sell USD.' But near term, we caution that the decline in the USD may see a slower speed or even pause in the interim. Mild bearish momentum on daily chart intact but RSI shows tentative signs of turning around from near oversold conditions. Support at 96.40, 96.10 levels. Resistance at 97.50/60 levels, 98.20 (21 DMA)."