US Dollar Index Offered Near 105.00 Amid Strong Risk Appetite

• The index remains unchanged with a bearish tone near 105.00.
• Favorable risk appetite continues to weigh on the dollar.
• US yields add to Tuesday’s decline across the curve.

The dollar, measured by the dollar index (DXY), remains under pressure and approaches the 105.00 area on Wednesday.

USD Index Weakens on Higher Risk Appetite

The index probes the 2-day low area in the 104.90/85 band mid-week as investor preference for the risk complex appears to have gained further momentum in response to China’s reopening.

In line with the dollar’s daily pullback, US yields accelerate down to fresh multi-week lows at the belly and long end of the curve, while the short end trades at 3-session-to-date lows.

On the calendar, MBA mortgage applications contracted 1.9% in the week to December 2, while the change in consumer credit will be released later in the American session.

What to watch out for in the USD

The dollar continues to be offered as investors seem to have digested recent hawkish messages from some Fed policymakers, as well as the above-expectation results in some US fundamentals.

While hawkish messaging from Fed officials keeps the Fed’s pivot narrative in the cold, upcoming US fundamentals results are likely to play a key role in determining the chances of a slower pace. of the Fed’s normalization process in the near term.

technical levels

The index is now down 0.47% at 105.06 and a break of 104.11 (Dec 5 monthly low) would open the door to 103.41 (June 16 weekly low) and finally 101.29 (May 30 monthly low). Elsewhere, the next hurdle stands at 105.82 (weekly high Dec 7), followed by 107.19 (weekly high Nov 30) and 107.99 (weekly high Nov 21).