The US dollar is holding firm in consolidation mode following its recent surge after strong payroll data, according to OCBC FX strategist Sim Moh Siong. Asian currencies are showing divergent performance as they respond to varying policy signals and capital flows across the region. In a significant shift, OCBC has eliminated its remaining Federal Reserve rate cut projection and now expects the Fed to maintain rates unchanged through the end of 2026, marking a hawkish recalibration of their outlook. The bank has also revised its US 10-year Treasury yield forecasts higher to reflect the more restrictive monetary policy stance. Traders should anticipate continued dollar strength as the Fed pause outlook solidifies, particularly against Asian currencies where policy divergence is widening. The adjustment comes as markets reassess terminal rate expectations following resilient US employment data that reinforces the case for keeping borrowing costs elevated.
FXnCO Insight
Dollar bulls maintain the advantage through 2026 with Fed cuts off the table—position for rangebound strength with upside breakout potential on any inflation surprises.
Source: FXStreet