DXY: Asian FX are under pressure – OCBC

US Dollar (USD) continued to trade better bid against most Asian FX, as 2 Apr reciprocal tariff draws closer. It may also be complacent at this point to second guess if tariffs will be narrower and it is perhaps prudent to wait and see for better clarity. As of now, the Trump administration is not planning separate, sectoral-specific tariffs to be unveiled at the same event, but nothing stops Trump from announcing these tariffs on other dates before or after. DXY was last at 104.38 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note. 

Rebound risk remains likely in the interim

"Overnight, Trump threatened to impose tariffs on countries that buy Venezuelan oil. It was also mentioned that only countries that don’t have tariffs on the US, and with whom the US has a trade surplus, will not be tariffed under the reciprocal plan. So likely, Australia, Singapore, HK may be excluded while China, EU, South Korea, Japan, India and Thailand are amongst some of the countries that may be hit. Tariff imposition can undermine sentiments and lead to spikes in the USD." 

"The likes of KRW, JPY, CNH, MYR, IDR and THB may be undermined in the near term. On IDR, the currency has seen relative underperformance, largely due to softer fundamentals including fiscal worries, unexpected current account deficit, economic soft patch and growing expectations that BI may have to soon ease policy. At the same time, external conditions turned unfavorable, further weighing on IDR."  

"The upticks seen in USD/CNH and USD/CNY fixing seen over the last few sessions are also key factors to watch as a stable RMB had helped to anchor sentiments in AxJ FX. Daily momentum is mild bullish while RSI rose. Rebound risk remains likely in the interim. Resistance here at 104.40 and 105 levels (50% fibo, 21, 200 DMAs). Support at 104 (61.8% fibo retracement of Oct low to Jan high), 103.10, 102.50 levels (76.4% fibo)."