The US dollar index plummets for the fourth day in a row, but remains above 96.00

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  • The DXY loses 0.07%, but remains above 96.00 as the American session ends.
  • The positive news related to Omicron that improved the mood of the market weakened the dollar.
  • US Dollar Index (DXY) Price Forecast: Bias to the upside, although testing the lower trend line of the ascending triangle.

The US Dollar Index (DXY), which measures the performance of the dollar against a basket of six pairs, fell 0.07%, reaching 96.02 during the American session at the time of writing this article. Improving market sentiment, spurred by positive news on the Covid-19-Omicron front, increased appetite for riskier assets to the detriment of the safe-haven status of the US dollar.

In recent days, the U.S. Food and Drug Administration (FDA) approved Pfizer and Merck treatment pills for Covid-19, which would help the healthcare system treat the disease in high-risk patients in the 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 Safety Agency reported that 50-70% of people who test positive for the Omicron strain would not need to be hospitalized.

That said, with two countries spreading positive news about the recently predominant Omicron variant, investors are concerned about a possible economic slowdown.

Meanwhile, the yield on the 10-year US Treasury bond rises about three and a half basis points, standing at 1,494%, approaching 1.50%.

US Dollar Index (DXY) Price Forecast: Technical Outlook

The daily chart of the US Dollar Index shows the strong dollar narrative staying in place. The DXY broke below the central Pitchfork uptrend channel, which meets the ascending triangle in an uptrend.

At the time of writing, the DXY is testing the lower trend line of the ascending triangle in an uptrend, threatening to break to the downside, which would invalidate the triangle formation causing the DXY to drop towards 95.55.

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

Technical levels

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