The US Dollar is trading in a fairly stable manner during the calm holiday trading on Friday. The US Dollar Index (DXY) couldn’t hold its position above 108.00. The markets are cautious, and trading desks are short-staffed because of the Christmas holiday.
Unresponsive to Asian Data
The Dollar didn’t really react to what was happening in Asian markets. Data showed that Japan’s Industrial Production contracted further and Chinese industrial companies had lower profits.
Light US Economic Calendar
The US economic calendar is pretty thin on Friday. There are only the preliminary Goods Trade Balance and the Wholesale Inventories data. Not much movement is expected from these, so a steady trading session is anticipated.
Daily Digest of Market Movers
US Data Releases
The November Goods Trade Balance had a widening deficit. It went to 102.9 billion USD from the previous 98.7 billion USD deficit, and it was higher than the 100.8 billion USD estimate.
November Wholesale Inventories shrunk by 0.2% compared to the previous 0.2%.
Equity Market Situation
Equities are trading in a mixed way on Friday. All US equity futures are trading lower, with the Nasdaq losing over 1%.
Fed Rate Expectations
The CME FedWatch Tool for the first Fed meeting of 2025 on January 29 shows an 89.3% chance for a stable policy rate and only a 10.7% chance for a 25 basis points rate cut.
US 10-Year Benchmark Rate
The US 10-year benchmark rate is trading at 4.59%, not far from this week’s high at 4.64%.
US Dollar Index Technical Analysis
Quiet Friday Expected
The US Dollar Index (DXY) isn’t expected to hit any firm levels on Friday due to low liquidity and few market participants between Christmas and New Year. Big movements aren’t likely unless there’s a geopolitical event. It seems the DXY will go into New Year’s Eve trading just above 108.00.
Resistance Levels
On the upside, a trend line starting from December 28, 2023, is acting as a moving cap. The next firm resistance is at 109.29, which was the peak on July 14, 2022, and has been an important level in the past. Once past that, the 110.00 round level comes into play.
Support Levels
The first downside barrier is at 107.35, which has now changed from being a resistance to a support. The second level that might stop selling pressure is 106.52. After that, 105.53 could also be considered. Meanwhile, the 55-day Simple Moving Average (SMA) at 105.83 is moving up towards that level.
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