USD Index to head lower on soft inflation expectations – OCBC

There was a 1% rally after the US Consumer Price Index (CPI) release but USD Index (DXY) gains were more than reversed. Downside surprises to US data may see more room for the USD to fall, according to economists at OCBC Bank. 

Bias to lean against strength

“Today we have US Retail Sales, Uni of Michigan Sentiment, of which we pay close attention to 1-y and 5-10y inflation expectations component. A softer print may see DXY trade lower.”

“Daily momentum is showing very tentative signs of turning mild bearish but decline in RSI moderated. Bias to lean against strength.”

“Resistance at 113.70, 114.77 (previous high).”