US Dollar (USD) continued to trade on the backfoot, from news of Trump removing Fed Governor Lisa Cook from her position. DXY last at 98.65 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Mild bearish momentum on daily chart fades

"It remains unclear if Trump has his way because Lisa Cook indicated her intent to challenge Trump’s decision in courts. Regardless, the decline in USD reflects concerns over Fed independence and potentially, how the make-up of the Fed may be more dovish leaning going forward. This can skew the votes for cut and ultimately weigh on USD. But USD bears need weak US data or more dovish Fed rhetoric."

"We will be keeping a lookout on whether data or Fedspeaks changes the narrative from 25bp cut expectation to discussion of 50bp cut at Sep FOMC or whether the trajectory of cut increases. For now, markets are still pricing in 86% chance of 25bp cut at September FOMC and a total of about 55bps cut this year."

"Mild bearish momentum on daily chart faded while RSI was flat. 2-way trades likely in the interim. Resistance at 98.90 (100 DMA), 99.60 levels. Support at 97.60 levels. Data focus on core PCE (Fri) before NFP (next Fri)."