The US Dollar (USD) continues to gain strength, driven by optimism surrounding President-elect Donald Trump’s anticipated economic policies, including tax cuts and potential stimulus measures. The “Trump trade” has lifted the USD broadly against major currencies, supported by expectations of Fed rate cuts and positive economic sentiment indicators. With limited economic data today, market attention shifts to several Fed speakers, which could add further cues for USD momentum.
Key Developments:
- Economic Optimism: The NFIB’s optimism index for small and medium-sized firms rose to 93.7, surpassing forecasts, and additional optimism data from the TechnoMetrica Institute is anticipated later today.
- Fed Speaker Lineup: Remarks from multiple Fed officials today could reinforce expectations for gradual rate cuts, sustaining USD strength.
- Equity and Bond Markets: US equities are slightly down following Monday’s gains, while the 10-year Treasury yield rises to 4.35%.
Technical Outlook: USD Index
The Dollar Index (DXY) is testing key resistance at 105.89. Breaking this level could push the DXY toward 106.52, with 107.00 in sight. On the downside, support is anticipated at 104.00, with the 200-day SMA at 103.87 acting as a potential floor.
