US Dollar plunges to multi-month lows amid dovish Fed

• The DXY Index hovers around 101.90, presenting its lowest level since August.
• Despite positive Retail Sales Figures from November, the US Dollar continues to weaken.
• The Greenback is suffering the aftermath of Wednesday’s Fed announcement.
• The yield on the 2-year US bond declined to its lowest since June.

The US Dollar (USD) declined to 101.80, its weakest position since August. The Federal Reserve's (Fed) unexpected hint at three rate cuts for 2024 weighs heavily on US Treasury yields and the Greenback.

In the last meeting of the Fed in 2023, the bank welcomed cooling inflation figures, and the revised Dot Plot suggests Fed governors aren't seeing any rate hike in 2024. Additionally, they forecasted 75 basis points of easing. This means that the market expectations are aligning with the bank's stance, which is cheered by markets as it fuels risk-on flows.

Daily Market Movers: US Dollar loses ground, despite positive Retail Sales figures, US yields in multi-month lows

• The Fed hinted at a triad of rate cuts expected for 2024, which applied pressure on the US dollar. 
• The November Retail Sales report by the US Census Bureau indicated a 4.1% (YoY) increase, a stronger performance than the 2.2% increase of the previous month. 
• The US Department of Labor reported Initial Jobless Claims for the week ending on December 9 at 202K, slipping beneath the 220K consensus and previous 221K figures, signaling an unexpectedly healthy job market.
• Currently, US bond yields are decreasing, with rates at 4.35% for the 2-year yield, 3.87% for the 5-year yield, and 3.91% for the 10-year yield. 
• The CME FedWatch Tool projections suggest that markets foresee rate cuts as early as March 2024. 

Technical Analysis: DXY Index bears take the lead, indicators dive to negative zone

The Moving Average Convergence Divergence (MACD) histogram shows rising red bars, a signal typically associated with bearish momentum, while the Relative Strength Index (RSI) is nearing oversold conditions, adding further confirmation that the bears command price movement.

Furthermore, examining the Simple Moving Averages (SMAs), the index is positioned below the 20, 100 and 200-day SMAs, indicating a dominant bearish bias in the larger context. This suggests that despite the oversold RSI hinting at temporary relief, the overall selling pressure remains strong, and the bears continue to dictate the price action. 

Support levels: 101.50, 101.30, 101.00.
Resistance levels: 103.45  (20 and 200-day SMA bearish crossover), 104.50 (100-day SMA), 104.70.