The US Dollar (USD) traded in a subdued range overnight as markets await tonight’s November CPI report, which could sway expectations for 2026 rate cuts. Mild bearish momentum persists, but technical signals hint at a potential breakout, leaving traders poised for two-way moves. DXY was last seen around 98.55 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Fedspeaks suggest caution, but neutral rate in focus

"USD traded in subdued range overnight as markets await US CPI data, following the payrolls report on Tuesday. Markets still implied ~26% probability of a Jan cut while expectation for cumulative cut in 2026 remains largely steady at -60bps. There needs to be new catalyst for market pricing to shift. And this puts focus on Nov CPI report tonight. Data outcome can be binary - an underwhelming print should weigh on USD while a hotter print may point to upward pressure on US rates and USD."

"Mild bearish momentum on daily chart intact while RSI showed tentative signs of turning higher from oversold conditions. 2-way trades likely in the interim. Compression of moving averages observed with 21, 50, 200 DMAs converging. This typically precedes break-out trade. Support at 97.90, 97.60 (23.6% fibo). Resistance at 98.60 levels (100 DMA, 38.2% fibo), 99.10/20 levels (21, 50, 200 DMAs, 50% fibo retracement of May high to Sep low) and 99.80 levels (61.8% fibo)."

"On Fedspeaks overnight, Waller supported further rate cuts to get Fed’s setting back to neutral while also saying there is no need for policymakers to rush to cut (because inflation is still up). He also said that rates are still 50 – 100bps above neutral. Goolsbee told CNN in an interview that he is pretty optimistic that the economy will sustain at a stabilized rate that’s pretty decent, and if it can do that and inflation is headed down to something like 2%, I think rates can go down."