DXY: Calibrating expectations - OCBC

US Dollar (USD) inched higher overnight, in absence of data. DXY was last at 98.03 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Mild upside risks likely in the interim

"Markets are starting to be wary if Fed Chair Powell may even tilt dovish or give a clear, decisive view on policy bias at Jackson Hole symposium (Friday). The theme for this year's event is 'Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy'. The theme could not be timelier, coming at a point when the US labour market is showing signs of softening."

"Markets continue to price in over 83% chance of 25bp cut at Sep FOMC. We had earlier indicated there are expectations for Powell to pivot dovish but cautioned that also leaves room for market disappointment, given that market remains short USD. Worries about Powell not playing ball may see USD trade sideways until we get clarity from Powell."

"Mild bearish momentum on daily chart shows signs of fading while RSI rose. 2-way trades, with mild upside risks likely in the interim. Resistance at 98.30 levels (21 DMA), 99.10 (100 DMA). Support at 97.60, 97.10 levels. Focus for the week on FOMC minutes, prelim PMIs, Philly Fed business outlook (Thursday); Powell's speech at Jackson Hole (Friday)."