US Dollar (USD) bounced at first when Trump threatened with tariffs last Friday. But the bounce did not last, and USD extended its weakness into Monday trade. The price action underscores a re-pricing of weak USD sentiment and confidence. DXY was last at 98.03 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Risks are skewed to the downside

"Last Friday, Trump threatened a 50% tariff on all goods sent to the US from the EU, as soon as 1 Jun (but later extended to 9 Jul). He also warned Apple that he would impose a 25% import tax 'at least' on iPhones not manufactured in America and later broadened the threat to any smartphone maker including Samsung. This move followed Trump's earlier announcement that the US would send letters to some of its trading partners to unilaterally impose new tariff rates over the next 2-3 weeks."

"However, it remains unclear whether these new tariffs would be in addition to existing ones or if they would supersede previous rates. Compounding Trump’s tariff angst, the One, Big, Beautiful Bill has also casted a long shadow over the sustainability of the US fiscal position. Policy unpredictability surrounding Trump’s tariffs and the erosion of US exceptionalism could further undermine sentiment and confidence in the USD."

"Bullish momentum on daily chart faded while RSI fell. Risks are skewed to the downside. Next support at 97.90 (2025 low), 97.40 levels. Resistance at 99.10, 100.2 (21 DMA) and 100.80 (23.6% fibo retracement of 2025 peak to trough). US market is closed today for Memorial Day holiday."