The Dollar Index (DXY) drifted lower, tracking the decline in UST yields. DXY was last at 103.60 levels, OCBC’s FX analyst Frances Cheung and Christopher Wong note.

DXY pullback is not ruled out

“Softer housing data was the trigger. Elsewhere, Fed’s Bostic said that he is not in a hurry to lower rates to neutral levels of 3 – 3.5% (by his estimation). He reiterated the central bank’s benchmark rate is still “a ways” above the level at which it neither boosts nor slows the economy. He also said he expects inflation will fall to the Fed’s target by the end of next year.”

“Daily momentum remains bullish but RSI turned lower from overbought conditions. We reiterate that the recent run up looks stretched technically and pullback is not ruled out. Resistance at 103.80 levels (200 DMA, 50% fibo). Support at 103.30 (100 DMA), 101.75/90 levels (50 DMA, 23.6% fibo retracement of 2023 high to 2024 low), 102 (21 DMA).”