US Dollar (USD) fell after core CPI underwhelmed expectations. But the pullback was also quickly retraced. DXY was last seen at 109.09, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Some risk of pullback not ruled out but

“Markets are likely cautious ahead of Trump inauguration (20 Jan), fearing that tariffs would be announced soon. On Truth social platform, President-elect Trump said that he will create an external revenue service to collect tariffs, duties and all revenue that come from foreign sources.”

“That said, tariff uncertainty remains in terms of timing, magnitude and scope of products. Recent report about the Trump team considering a schedule of gradual tariffs increasing by about 2% to 5% a month is one that may defuse some fears, temporarily.”

“Mild bullish momentum on daily chart faded while RSI eased. Bearish divergence observed on RSI. Some risk of pullback not ruled out but likely to be shallow ahead of event risk. Support at 108.60 (21 DMA), 107.25 (50DMA). Resistance at 110.10, 110.90 levels. Today brings retail sales, Philly fed business outlook.”