DXY: Tariff confusion derailed momentum – OCBC
USD traded firmer on Trump threats on tariffs. DXY was last seen trading at 106.60, OCBC's FX analysts Frances Cheung and Christopher Wong note.
Rebound risks not ruled out
"He said tariffs on EU will be 25% on autos and other things. Elsewhere, there was also confusion when Trump mentioned that the 25% tariff on Canada and Mexico would begin on 2 Apr, when the supposedly known effective date was 4 Mar. A White House official has confirmed that deadline remains as 4 Mar and Trump has yet to decide whether to grant another extension."
"Reciprocal tariff will begin on 2 Apr. The confusion had resulted in choppy trades in FX markets overnight. Nevertheless, tariff threats tie in with our view that caution is warranted as we enter March. Tariff imposition on these dates can undermine sentiments and lead to spikes in the USD, unless the implementation dates are pushed back again."
"Bearish momentum on daily chart is fading while RSI rose from near oversold conditions. Rebound risks not ruled out. Next support at 105.50, 105.20 levels (50% fibo). Resistance at 107.35 (21 DMA), 107.80 levels (23.6% fibo). Support at 106.30/40 levels (100 DMA, 38.2% fibo retracement of Oct low to Jan high). That said, core PCE remains a focus on Friday."
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FXStreet Insights Team
FXStreet
The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.
