The US Dollar is nearing a fresh two-year high in the DXY after revisions to Durable Goods data boosted the Greenback

The US Dollar (USD) is rallying on Monday, with the US Dollar Index (DXY) nearing a fresh two-year high, driven by an upward revision in the November Preliminary Durable Goods release from 0.3% to 0.8%, which boosted the Greenback.

As the US economic calendar quiets down with only minor data points left, the US Treasury faces several bond auctions. Meanwhile, US markets are breathing a sigh of relief after a government shutdown was averted at the last minute, just ahead of the Christmas and New Year’s holidays.

Daily Digest Market Movers: US Treasury at Work

• A government shutdown was narrowly avoided on Friday, with President Joe Biden signing legislation on Saturday to fund the government through mid-March.
• The Chicago Fed National Activity Index for November came in at -0.12, improving from the previous release of -0.40.
• The preliminary November US Durable Goods release showed a decline of 1.1%, compared to the previous 0.3%, but the US Dollar strengthened following an upward revision from 0.3% to 0.8%. Durable Goods excluding Transportation came in at -0.1%, down from 0.2%.
• The US Consumer Confidence Index for December will be released at 15:00 GMT.
• The US Treasury faces a busy Monday with four auctions: At 16:30 GMT, 3-month, 52-week, and 6-month bills will be allocated, followed by a 2-year Note auction at 18:00 GMT.
• Asian equities have rebounded, ending a six-day losing streak, while European equities remain sluggish and US futures are flat.
• The CME FedWatch Tool shows a 91.4% chance of a stable policy rate at the first Fed meeting of 2025 on January 29, with an 8.6% chance of a 25-basis point rate cut.
• The US 10-year benchmark rate is trading at 4.56%, just below last week’s high of 4.59%.
  
  

US Dollar Index Technical Analysis: Tail Risks as Year-End Approaches

The US Dollar Index (DXY) is entering the final normal trading day before Christmas with a light economic calendar ahead, prompting traders to focus on short-term moves, making any price action potentially short-lived and susceptible to quick profit-taking.

On the upside, a trendline from December 28, 2023, is acting as a cap, with the next significant resistance at 109.29, the peak from July 14, 2022, a key level to watch. Beyond that, the 110.00 round figure could become the next target.

On the downside, the first support is 107.35, which has flipped from resistance to support. If selling pressure persists, 106.52 could act as the next level of support, with 105.53 and the 55-day Simple Moving Average (SMA) at 105.23 potentially in focus.