US Dollar (USD) was a touch softer this morning on comments from Fed’s Waller. DXY was last at 98.37 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Still reasonable to plan on 2 rate cuts in 2025

"He believes it makes sense for the Fed to cut 25bp at the upcoming FOMC. He reiterated that policy should look through tariff effects and focus on underlying inflation, which seems to be close to FOMC’s 2% goal. He also described the labour market as soft, and the risk of a weaker job market is 'greater and sufficient' to cut interest rates."

"Separately, Fed’s Daly said that it is still reasonable for policymakers to plan on 2 rate cuts this year, putting an emphasis on central bank should not wait too long before moving. DXY made a second attempt overnight to test higher but again 98.90/99 levels capped the upside.Bullish momentum on daily chart intact while RSI has eased lower from near overbought conditions."

"Price action suggests that DXY’s corrective bull run may be facing some exhaustion as markets look for the next piece of catalyst. Support at 97.70 (21 DMA), 97 levels. Resistance at 98.80 (50 DMA), 99.60 levels (23.6% fibo retracement of 2025 high to low). Day ahead brings housing starts, building permits, University of Michigan’s inflation expectations. Softer-than-expected print may keep USD bulls on a leash."