DXY: Short squeeze on the cards - OCBC

US Dollar (USD) short squeeze gained traction and broadened against more currencies from safe haven to procyclical FX. MYR, Gold, JPY and THB led losses. While US reached a trade deal with UK, US Commerce Secretary Lutnick did say that trade deals with South Korea and Japan could take significantly more time, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Risks remain somewhat skewed to the upside

"This may also dampen enthusiasm about US trade talks with China (Vice Premier He Lifeng to meet with US Treasury Secretary Scott Bessent and US Trade representative Jamieson Greer) in Switzerland this weekend) and other Asian nations (in coming weeks). This morning, Bernama news reported that Malaysia's bid to coordinate a regional response to US tariffs with ASEAN as a bloc had been rejected by the US."

"While recent developments on de-escalation may be positive at the headline level, it may not be perceived as positive when it comes to the details. Alongside higher than expected USD/CNY fix for a handful of sessions this week and the recent FOMC outcome (no hurry to cut), these underwhelming factors may temporarily add to broad weakness in Asian currencies, including JPY, MYR and KRW while USD rebounds from troughs. DXY rose, in line with our caution."

"Last at 100.45 levels. Daily momentum remains bullish while RSI rose. Risks remain somewhat skewed to the upside. Resistance at 100.80 (23.6% fibo retracement of 2025 peak to trough), 101.40 and 102 (50 DMA). Support at 99.60 (21 DMA), 98.90 levels."