US Dollar Index slumps for the fourth consecutive day but stays above the 96.00 threshold

• The DXY slides some 0.07% but stays above the 96.00 figure as the New York session winds down.
• Omicron-related positive news improved market mood weakened the greenback.
• US Dollar Index (DXY) Price Forecast: Upward bias, though testing the bottom-trendline of the ascending triangle.

The US Dollar Index (DXY), which measures the greenback’s performance against a basket of six peers, edges lower sone 0.07%, sitting at 96.02 during the New York session at the time of writing. Improvement in the market sentiment, spurred by positive news on the Covid-19 Omicron-related front, increased the appetite for riskier assets to the detriment of the US dollar safe-haven status.

In the last couple of days, the US Food and Drug Administration (FDA) approved Pfizer and Merck Covid-19 treatment pills, which would help the health system treat the disease on high-risk patients at home. Furthermore, a study in South Africa showed that people infected with the Omicron variant would be 80% less susceptible to requiring hospitalization. In the UK, the Health Security Agency reported that 50-70% of people testing positive for the Omicron strain would not need to be hospitalized.

That said, with two countries spreading positive news about the newly predominant Omicron variant, investors worries about possible economic slowdown ease.

In the meantime, the US T-bond 10-year benchmark note raises some three and a half basis points, sitting at 1.494%, closing to the 1.50% threshold.

The US macroeconomic docket featured a large bulk of data. The Fed’s favorite gauge of inflation the Core Personal Consumer Expenditure (PCE), increased some 4.7%, higher than the 4.5% expected, justifying the US central bank’s faster bond-taper decision revealed on its last meeting. In the labor market, Initial Jobless Claims for the week ending on December 17 rose to 205K in line with expectations.

Additionally, consumer confidence increased, with the UoM Consumer Sentiment Index for December at 70.6, higher than the 70.4 foreseen. At the same time, Durable Good Orders for November rose by 2.5%, higher than the 1.6% estimated. 

US Dollar Index (DXY) Price Forecast: Technical outlook

The US Dollar Index daily chart depicts the strong dollar narrative keeps in place. The DXY broke below the central Pitchfork’s uptrend channel, which confluences with the ascending triangle on an uptrend. 

At the time of writing, the DXY is testing the bottom-trendline of the ascending triangle on an uptrend, threatening to break to the downside, which would invalidate the triangle formation sending the DX tumbling towards November 30, 95.55. 

To the upside, the first resistance would be the figure at 97.00. A breach of the latter would expose the June 30 high at 97.80, followed by the ascending triangle target at 98.00.