DXY: 50-DMA an interim top? - OCBC

US Dollar (USD) had its choppy momentum overnight following reports that President Trump had considered dismissing Fed Chair Powell - though these claims were later denied by the man himself. DXY was last at 98.68 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

US data continues to surprise to the upside

"Moving away from the noise, US economic data continues to surprise to the upside. The latest Fed Beige Book, covering activity from late May to early July, indicated a slight uptick in overall economic activity. More notably, the report shed light on the impact of tariffs. All 12 Federal Reserve districts reported rising prices, with businesses facing 'modest to pronounced input cost pressures related to tariffs'."

"Many firms responded by passing on part of these costs to consumers through price increases or surcharges. However, some opted to absorb the costs due to heightened price sensitivity among customers, leading to compressed profit margins. With core goods CPI already ticking higher, markets remain cautious about the inflationary effects of tariff passthrough. Any further evidence of price pressures could prompt a more hawkish repricing of Fed expectations, and this risks USD overshooting to the upside in the near term."

"Bullish momentum on daily chart intact while RSI is near overbought conditions. Technically the recent upmove in DXY stalled at 50dma at 98.90 levels. This may well serve as interim resistance from a price action point of view. Failure to break above could point to exhaustion next and USD may well consolidate in 97.50 - 99 range. Other levels to watch: Resistance at 98.80 (50 DMA), 99.60 levels (23.6% fibo retracement of 2025 high to low). Support at 97.60/80 (21 DMA), 97.20 levels."