US Dollar Index approaches 2022 with mild gains around 96.00

• DXY keeps the previous day’s rebound from multi-day low.
• Omicron, geopolitics underpin safe-haven demand of the greenback.
• Japan’s off restrict bond moves in Asia, light calendar and year-end liquidity crunch add to the trading filters.
• Bulls remain hopeful on hawkish Fed, stimulus expectations.

US Dollar Index (DXY) picks up bids to refresh intraday high near 96.05, up for the second consecutive day during Friday morning in Asia.

The greenback gauge portrays the market’s cautious sentiment amid thin end-of-year liquidity conditions. That said, the major catalysts are mixed concerns over the South African covid variant, namely Omicron, as well as geopolitical headlines relating to Iran, China and Ukraine.

Reuters’ tally for the US seven-day average of new coronavirus cases refreshes record top for the second consecutive day with 290,000 latest figures. The same is the conditions with Europe, Australia and the UK while some of the Asian nations have also registered pick-up in covid infections. The same push Health Experts and World Health Organizations (WHO) to warn over year-end celebrations.

Elsewhere, Iran’s space launch derails previous optimism concerning the denuclearization deal with the global leaders. On the same line were the dislikes of China and Hong Kong for the US push to release Hong Kong-based journalists. Furthermore, “US President Joe Biden and his Russian counterpart Vladimir Putin on Thursday warned each other that an escalation of tensions over Ukraine could rupture relations between the two countries, U.S. and Russian officials said,” per Reuters.

It’s worth noting that the firmer US data joined five-week high US inflation expectations, per 10-Year Breakeven Inflation Rate numbers from the Federal Reserve Bank of St. Louis (FRED), favored the DXY to rebound the previous day. The US Initial Jobless Claims eased to 198K versus 208K expected during the week ended on December 24. Further, Chicago Purchasing Managers’ Index rose past 62.0 forecast to 63.1 for December.

That said, the Wall Street benchmarks posted mild losses whereas the S&P 500 Futures decline 0.35% at the latest.

Moving on, the DXY traders are likely to witness a lackluster end of 2021 but the bulls may keep the reins considering the Fed’s hawkish mood and hopes of further stimulus from the Biden administration.

Technical analysis

Thursday’s inverted hammer candlestick hints at another battle with the 21-DMA level of 96.20. Adding strength to the stated resistance is a descending trend line from December 15. Meanwhile, DXY bears remain away before witnessing a daily closing below the 50-DMA surrounding 95.55.