DXY: Rebound risk remains likely in the interim - OCBC

US Dollar (USD) inched higher as 2 Apr reciprocal tariff deadline draws nearer. Officials said that Trump will announce widespread reciprocal tariffs on nations or blocs but is set to exclude some. DXY was last at 104 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note. 

USD may continue to be better bid in the near term

"As of now, Trump administration is not planning separate, sectoral-specific tariffs to be unveiled at the same event. 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 and perhaps, UK may be excluded while China, EU, South Korea, Japan, India and Thailand are amongst some of the countries that may be hit (for having tariff on US goods and a trade surplus with US)." 

"Tariff imposition can undermine sentiments and lead to spikes in the USD. The likes of KRW, JPY, CNH, MYR, IDR may be undermined in the near term. In addition, there remains some caution of EM contagion risks. Weekend arrest and subsequent imprisonment of Istanbul's mayor may continue to weigh on Lira and EM FX today. Tariff war and lingering EM contagion fears can undermine risk sentiment." 

"USD may continue to be better bid in the near term. Daily momentum turned mild bullish while RSI rose. Rebound risk remains likely in the interim. Resistance here at 104 (61.8% fibo retracement of Oct low to Jan high), 104.40 and 105 levels (50% fibo, 21, 200 DMAs). Support at 103.10, 102.50 levels (76.4% fibo)."