DXY: Mild bullish momentum intact – OCBC

US Dollar (USD) rose in early trade, with impact more pronounced on Asian FX than DM FX. US joining Israel on attack in Iran risks a deeper conflict in the Middle East. DXY was last seen trading at 99.41 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Geopolitical developments remain fluid

"This can bring disruption to supply chains and pose risks of even higher oil prices, as well as undermine broader risk sentiments. Shipping insurance, freight costs will likely increase, and delivery times may be longer, exposing fragilities in global trade. High beta and net oil importing Asia FX such as PHP, INR, KRW, TWD, and THB may be affected more than other Asian or DM FX. The risk of oil prices going higher can add to the oil import bill."

"Elsewhere, markets may also speculate that that Fed’s plan to lower rates may be pushed out. In the interim, this can undermine Asian FX, that are sensitive to higher US rates. Nevertheless, geopolitical developments remain fluid, and two-way risks are highly likely as markets keep a close eye on any Iranian retaliation. Iran state media had reported that the Iranian parliament supported the closure of the Strait of Hormuz. Final decision hinges on Iran’s Supreme National Security Council and Supreme Leader Ayatollah."

"Mild bullish momentum intact while RSI rose. Resistance at 99.50 (50 DMA), 100.2 and 100.60 levels (23.6% fibo retracement of 2025 high to low). Support at 98.20, 97.60 levels (recent low). Day ahead brings prelim PMIs. Fed’s Waller, Bowman, Goolsbee, Williams and Kugler are scheduled to speak later."