DXY: Trump tariffs challenged - OCBC

US Dollar's (USD's) rebound found momentum from a US court ruling, saying that Trump's unilateral imposition of 'Liberation Day tariffs' under the International Emergency Economic Powers Act (IEEPA) is invalid. DXY was last at 99.93 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

2-way trades still likely in the near term

"The ruling also blocks the enforcement of fentanyl-related tariffs on China, Mexico, and Canada that were announced earlier this year. In response, the Trump administration had filed a notice that it was appealing the ruling, and ultimately the US Supreme Court may have the final say. The court ruling helps to restore some credibility to the system which has been undermined by the unpredictability of Trump's tariffs. "

"The check and balance system is at least intact for now, providing a knee-jerk rebound for the USD while US futures jumped over 1%. Adding to FX market volatility was BoK Governor Rhee's comments that Asian nations had currency talks with the US. This headline saw some knee-jerk reaction, slowing USD's advance against Asian FX. Nevertheless, Rhee's comments alongside, uncertainty over the legitimacy of Trump's tariffs may continue to see more 2-way price action in the USD ahead of core PCE data (Friday)."

"Daily momentum is not showing a clear bias while RSI rose. 2-way trades still likely in the near term. Resistance at 100.80/101 levels (50 DMA, 23.6% fibo retracement of 2025 peak to trough). Support at 99.2 and 97.90 (2025 low)."