USD slightly firmer on Fed 2026 cut revisions – OCBC

💡 DMK Insight

The USD’s recent uptick signals a shift in market sentiment as traders recalibrate their Fed rate cut expectations. With the Dollar Index (DXY) around 99, this movement reflects a cautious optimism ahead of key US labor and trade data releases. If the upcoming reports show stronger-than-expected employment figures or trade balance improvements, we could see the DXY push higher, potentially breaking resistance levels. This could also lead to a stronger USD against major currencies, impacting forex pairs like EUR/USD and GBP/USD. Conversely, if the data disappoints, we might see a quick reversal, so traders should keep an eye on the 98.50 support level for signs of weakness. Here’s the thing: while the mainstream narrative focuses on the Fed’s long-term cuts, the immediate data could create volatility. Institutions may adjust their positions based on these reports, so be prepared for rapid movements in the forex market. Watch for the labor data release this week as a potential catalyst for USD strength or weakness.