US dollar index defends 96.00 amid stable returns and calm markets

  • DXY retrieves offers to discount the intraday high.
  • Omicron news, US retail sales updates and relaunch hopes are all driving sentiment.
  • US Treasury Yields are defying pullback from two week high due to lack of major data / events.
  • Second tier data from the US Risk Catalysts may keep traders entertained, but no major surprises are expected in the holiday mood.

The US Dollar Index (DXY) updates the intraday high to 96.12, up 0.05% on a day, in an inactive Asian session on Tuesday.

The greenback’s gauge tracks US Treasury yields to consolidate recent losses amid a lack of major catalysts. Even so, the optimism linked to Omicron matches the hopes of further incentives to weigh on the listing.

That said, 10-year US Treasury yields hovered around 1.48% after the previous day’s 1.7 basis point (bps) decline. It should be noted that the S&P 500 Futures also shows slight losses around 4,775 after the Wall Street benchmark updated the record on Monday. The same is added to the corrective DXY removal.

When it comes to macros, markets are hoping for even fewer hospitalizations due to the South African variant of covid, namely Omicron, even as the number of global infections is growing faster. Strong retail sales in the United States during the holiday season, via online, as well as a reduction in the isolation and quarantine period for the general population from the previous 10 to five by the Centers for Disease Control and Prevention of the United States (CDC).

Elsewhere, headlines from the People’s Bank of China (PBOC) and China’s Ministry of Finance, suggesting more easy money to help support the growth of the world’s second-largest economy, also boosted risk appetite.

In addition, the ongoing talks on Iran’s denuclearization and a global push for peace between Russia and Ukraine also appear to have relieved the markets.

Note that the holiday season atmosphere dominates the markets and reduces volatility. Even so, data from US housing and Richmond Fed Manufacturing could keep traders entertained while headlines about Omicron and other risk catalysts may offer additional guidance.

Technical analysis

Although the DXY bounces off the monthly support line, around 96.00 at the latest, recovery moves remain limited by a descending trendline resistance from December 15th around 96.35.

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