USD index breaks below 107.00 as bears push higher

• The index melts below the 107.00 barrier, a new 3-month low.
• Appetite for riskier assets continues to rise on Friday.
• The preliminary report on consumer sentiment in Michigan will be released below.

Selling pressure gains strength and drags the dollar to fresh 3-month lows in the 106.70 zone when measured by the dollar index (DXY) at the end of the week.

The dollar index sinks, while risk appetite resurfaces

Sentiment around the dollar continues to deteriorate on Friday, forcing the index back to levels last traded in mid-August near 106.70. The US Dollar Index (DXY) It has already lost nearly 4% from Thursday’s highs near the 111.00 neighborhood to the current multi-week low zone.

Rising appetite for the risk complex continues to underpin the dollar’s intense sell bias, in line with growing speculation that the Federal Reserve could slow the pace of its future interest rate hikes. A decision on the latter could very well be on the table at the December FOMC event.

As for the data, the only major release will be the preliminary Michigan Consumer Sentiment for the month of November.

What to watch out for around the dollar

The index continues the sharp decline on the back of US inflation figures and on the background of firmer sentiment in the risk-linked galaxy.

Meanwhile, investor repricing of a likely Fed policy pivot now emerges as a new and fairly reliable source of dollar weakness, in line with a corrective decline in US yields across the curve.

Relevant USD Index Levels

Now the index is down 1.06% at 106.78 and a break of 104.78 (200-day SMA) would open the door to 104.63 (10th Aug monthly low) and finally 103.67 (27th June weekly low). Elsewhere, the next upside barrier is at 109.06 (100-day SMA), followed by 110.99 (55-day SMA) and then 113.14 (Monthly High Nov 3).