US Dollar Index steady at 96.37 inside the ascending-triangle that targets 98.00

• The US Dollar Index pares Friday’s losses, up 0.39%.
• The US 10-year Treasury yield plunges to 1.414%, but the greenback rises.
• DXY Technical outlook: Has an upward bias, threatening of breaking above the ascending triangle, which targets 98.00.

The US Dollar Index, also known as DXY, which measures the greenback’s performance against a basket of six rivals, climbs 0.29%, sits at 96.37 during the day as the New York session winds down, at the time of writing. The risk-off market mood was spurred from reports of the UK of the first COVID-19 Omicron-related death. Further, three of the most important central banks worldwide will host their last monetary policy meeting of 2021, adding fuel to the weak sentiment.

In the US bond market, Treasury yields in the long-term maturity of the curve fell with 10s, the 20s and 30s dropping between seven to eight basis points, ended at 1.414%, 1.84%, and 1.80%, each. 

On Monday, there is nothing to report on the economic docket. By Tuesday, the Department of Labors would release the Producer Price Index for November. Apart from that, the market participants’ focus is on the Federal Reserve monetary policy meeting, which begins on Tuesday. At the same reunion, the Fed will unveil its Summary of Economic Projections (SEP), which has the famous “dot-plot,” a chart that shows policymakers interest rates expectations. A Bloomberg poll predicts that all US central bank policymakers (18) would expect two rate hikes by 2022.

Money market futures show around 66 basis points of tightening by the end of next year.

Further, two weeks ago, a parade of Fed policymakers, led by Chairman Jerome Powell, expressed their interest in a “faster” QE’s reduction. The same Bloomberg poll sees an increase to $30 billion reduction, beginning in January of 2022.

US Dollar Index (DXY) Price Forecast: Technical outlook

The US Dollar Index started the week above 96.00 and approached the top-trendline of the ascending triangle. The DXY is in a clear uptrend, and through the last couple of weeks, price action consolidated around the 95.50-96.50 range, forming an ascending triangle in an uptrend.

In the event of breaking to the upside of the formation, the ascending-triangle target would be 98.00, but it would find some hurdles on the way up.

The first resistance would be 97.00, followed by June 30 high at 97.80, followed by the bullish flag 98.00 targets.