Fed officials signal preparedness for faster easing – OCBC

Fed officials highlighted the need for flexibility in monetary policy, with Miran cautioning that labor market weakness can emerge rapidly and Williams noting that policy is well positioned after last week’s rate cut. US Dollar (USD) momentum remains bearish, with support around 98.10–97.60 and resistance near 98.40–99.80. Dollar Index (DXY) dipped modestly; last seen around 98.20 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

DXY faces bearish momentum amid oversold conditions

“On Fedspeaks overnight, Miran said that Experience suggests that labor market deterioration can occur quickly and nonlinearly and be difficult to reverse. In part because monetary policy lags several quarters and a quicker pace of easing policy would appropriately move us closer to a neutral stance.”

“Williams said that monetary policy is well positioned for next year following last week’s interest rate reduction, amid increased risks to employment and somewhat lessened inflation risk.”

“Bearish momentum on daily chart intact while RSI is near oversold conditions. Some consolidation is not ruled out in the interim. Support here at 98.10, 97.60 (23.6% fibo). Resistance at 98.40/60 levels (100 DMA, 38.2% fibo), 99.10/30 levels (21, 50, 200 DMAs, 50% fibo retracement of May high to Sep low) and 99.80 levels (61.8% fibo).”