- Following recent peaks, DXY is under mild pressure.
- US markets resume trading after the Thanksgiving holiday.
- On Friday, no US data releases are scheduled.
The US dollar index price remains subdued under the 97.00 level, wobbling around the 20-period SMA where traders are looking for decisive price action. As measured by the US Dollar Index (DXY), the US dollar is losing a little ground and will return to the 96.60 level on Friday.
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As US markets return to normal after Thanksgiving, the index adds to Thursday’s slight losses and retests the 96.70 region. As a result, there will be a decline in the stock market and bond market activity on Friday, which will close at 6:00 p.m. GMT and 7:00 p.m. GMT, respectively.
A rate hike by the Federal Reserve is expected to take place sometime in the second half of 2022, supporting the general outlook for the dollar. The current decline in quantitative easing may also accelerate depending on inflationary developments.
Although US yields have fallen below 1.55% and 30-year bonds have fallen below 1.90%, the dollar has slightly depreciated.
On the US calendar for Friday, none of the data releases will ignore the speech made by K. Lagarde in Europe this morning.
At the beginning of the week, the index reached new cycle highs of 97.00. This is partly due to the story that inflation will continue to rise, which drives up US yields and encourages speculation about an early rate change by the Fed. Additionally, the dollar is supported by the recovery of the labor market, the Biden infrastructure bill, and positive results from US fundamentals.
US Dollar index price technical analysis: More bears to follow
The US dollar index price is attempting to gain some respite around the 20-period SMA on the 4-hour chart. However, the outlook does not look promising, and we may see the index testing 50-period SMA and the horizontal level around 96.20. The further downside may find support near 96.00 ahead of 95.60.
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On the upside, 97.00 remains a stiff hurdle to break. Meanwhile, breaking above the level may aim for another bull run towards 97.50 ahead of 98.00.
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Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He’s well-known for his day trading reviews and multiple timeframe analysis.