DXY: Consolidate ahead of FOMC – OCBC

US Dollar (USD) continues to trade near recent lows. DXY was last seen trading at 103.26 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note. 

Mild upside risk not ruled out

"US exceptionalism trade continues to fade as markets are increasingly focused on how Trump policies are hurting the US economy. Recent US data including payrolls, CPI, PPI, Uni of Michigan sentiment, empire manufacturing and retail sales data have all disappointed to the downside." 

"FOMC meeting (Thu 2am SGT) is eyed this week. Focus on dot plot – if there will be any revisions to rates guidance and if Fed acknowledges growth concerns. Uncertainty on this front has led to mild unwinding of USD shorts. "

"Bearish momentum on daily chart is fading while RSI shows signs of rising from near oversold conditions. Mild upside risk not ruled out. Resistance at 104 (61.8% fibo retracement of Oct low to Jan high), 105 levels (50% fibo, 21, 200 DMAs). Support at 103.20, 102.50 levels (76.4% fibo). Data today brings housing starts, building permits, export/import price index and industrial production."