Dollar Index (DXY) continued to trade near recent lows and was last seen trading at 98.44, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Markets are questioning USD’s status as a reserve currency

"Daily momentum is bearish, while RSI fell into oversold conditions. Support at 98, 97.65 levels. Resistance at 99.5, 100.10 and 101.20 levels. USD sell-off may seem stretched for now. Short USD is also a big consensus trade and that warrants some caution especially if there is any short covering. But more broadly, we keep our view of a softer USD."

"Fundamentally, markets are questioning USD’s status as a reserve currency and a safe haven. Ongoing US protectionist measures, weakening of US exceptionalism and ballooning US debt are some catalysts that should keep the 'sell USD on rally' trade intact. We continue to expect USD to trade weaker against major FX, including EUR, CHF and JPY over the forecast horizon as the USD credibility issue takes centre-stage in the immediate term while Fed cut cycle comes into focus in 2H 2025."

"USD may also trade softer against AxJs and antipodeans, but USD’s decline may be more modest than against major FX, as we take into consideration the potential implication of tariffs on global growth, which can have a bearing on pro-cyclical AxJ FX. Week brings US prelim PMIs, Fed’s beige book (Wed); durable goods orders, initial jobless claims (Thu). In Washington, G20 Finance Ministers and central bank governors will convene for a 2-day meeting on 23 – 24 Apr on the sidelines of the IMF, World Bank meetings."

Source: Fxstreet