The dollar has been stalling just below the 97 mark for nearly a month and looks set to remain within range despite the Fed's hawkish tone last week. The DXY is holding below its yearly high of 96.88 points last month, with growing health uncertainties in the US likely offsetting the Fed's hawkish rhetoric.
Health developments in Europe and the U.S. will be the main catalyst for the dollar in the near term. A tightening of restrictions in Europe would benefit the dollar and vice versa.
In terms of technical analysis, the dollar index DXY has been marking time within an ascending triangle since late November. The exit from this triangle will indicate the next move. A breakout from the top would pave the way for a continuation of the underlying uptrend while a breakout from the bottom would pave the way for a retracement. The bullish oblique that runs through the June and October lows (in black) at around 95 points would then be in the crosshairs for short positions.
(Chart Source: Tradingview 26.12.2021)
Support & Resistance Levels:
R3 98.35
R2 97.80
R1 96.88
S1 95.76
S2 95.00
S3 94.62
Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.