DXY: Eyes on payrolls, ISM services – OCBC

US Dollar (USD) traded mixed overnight, with losses seen vs. TWD, THB and precious metals but traded largely firmer against most currencies including GBP, AUD, NZD and MYR. DXY was last at 96.83 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

USD to trade weaker

"Chatters of markets adjusting their positions ahead of US payrolls data tonight and the long weekend (US markets closed for Independence Day holiday on Fri). The One Big Beautiful Bill Act (OBBBA) was returned to the House of Representatives, where it is being met with objections from certain GOP members, and Trump still intends to get it signed by 4 July. Overnight, Trump called for Fed chair Powell to ‘resign immediately’."

"The big focus in the near term is US payrolls report tonight (830pm SGT). Consensus is looking for NFP to slow to 106k (vs. 139k prior), unemployment rate to pick up to 4.3% (vs. 4.2% prior) and hourly earnings to slow slightly to 0.3% m/m (vs. 0.4% prior). A softer print may weigh on USD, but an upside surprise print may see USD bounce ahead of 9th July trade truce deadline. Elsewhere, we also monitor initial jobless claims, ISM services data. 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, 98.10 (21 DMA). Technically, we caution that the decline in the USD may see a slower speed or even pause in the interim. But more broadly over the medium term, we continue to expect USD to trade weaker as USD diversification/ re-allocation trend takes centre-stage while Fed cut cycle potentially comes into focus in 2H 2025. US policy unpredictability, and concerns of about the rising trajectory of debt and deficits in the medium term should continue to undermine sentiments and confidence in the USD."