10 Jan 2025

• DXY consolidates its recent move up back closer to a two-year peak amid the Fed’s hawkish shift.
• Geopolitical risks and trade war fears further underpin demand for the safe-haven Greenback.
• The USD bulls turn cautious and wait for the release of the US NFP report before placing fresh bets.
• The US Dollar Index (DXY), which measures the performance of the Greenback against a selection of currencies, remains robust above the 109.00 threshold, marking its highest point since November 2022, as market participants await the release of the US Nonfarm Payrolls (NFP) report before making new investment decisions.
  
  Simultaneously, the anticipation of slower interest rate reductions by the Federal Reserve (Fed) has significantly contributed to the recent increase in US Treasury bond yields, providing additional support for the dollar. Furthermore, apprehensions regarding the tariff strategies of US President-elect Donald Trump, along with geopolitical uncertainties and a prevailing risk-averse sentiment, serve to reinforce the appeal of the safe-haven Greenback.
• From a technical standpoint, the recent rebound from the 107.55-107.50 resistance-turned-support level, along with the subsequent upward movement, appears to favor bullish traders. Additionally, the oscillators on the daily chart remain in positive territory and have not yet approached the overbought zone. This indicates that the index's most likely trajectory is upward, reinforcing the potential for further gains.
  
  However, it would be wise to wait for a breakthrough beyond the 109.55 level, or surpassing the two-year peak reached earlier this month, before initiating new bullish positions. Should this occur, the USD may gain momentum towards the psychological threshold of 110.00. The upward movement could continue towards the 110.50-110.55 range, leading to the 111.00 level and the November 2022 peak around 111.15.
  
  Conversely, the 108.75 level may provide some support; if the index falls below this point, it could accelerate its decline towards the 108.15 area, approaching the 108.00 level and the 107.55 horizontal support. A continuation of selling pressure below this latter level could facilitate a more significant corrective decline, potentially driving the USD below the 107.00 mark and testing the next relevant support in the mid-106.00s.