The US Dollar (USD) has seen a significant boost in its value for the 5th consecutive session, with the latest upsurge attributed to the release of a blockbuster payrolls report. According to OCBC’s FX analysts Frances Cheung and Christopher Wong, the DXY is currently standing at 102.58, indicating a strong performance by the USD in the foreign exchange market.
The unexpected strength of the jobs report has led to a sharp increase in the value of the USD, prompting market participants to unwind their dovish bets on the currency. This has further fueled the rebound momentum of the USD, with analysts now predicting only two 25bp cuts for the remaining 2 FOMC meetings in November and December. Additionally, with the US elections just around the corner, polls are showing a tight race between Trump and Harris.
Despite the recent surge in the value of the USD, analysts believe that there is still potential for upside risks. The ongoing rebalancing of historically low DXY positions suggests that the USD may continue to receive support in the near term. Daily momentum indicators remain bullish, with the RSI showing a rise in recent trading sessions. Key levels to watch in the coming days include resistance at 102.90 (38.2% Fibonacci retracement level) and support at 101.80/90 levels (50 DMA, 23.6% Fibonacci retracement of 2023 high to 2024 low). Market focus this week will be on the FOMC meeting, CPI data release on Thursday, and PPI data on Friday.
Overall, the recent strength of the USD has been driven by positive economic data and a shift in market sentiment towards the currency. The upbeat jobs report has prompted investors to reassess their expectations for future interest rate cuts by the Fed, leading to a more bullish outlook for the USD. With the US elections looming, uncertainties remain high, but the USD is expected to remain well-supported in the coming weeks. Traders will be closely monitoring key economic data releases and central bank meetings for further clues on the direction of the USD.
