US Dollar Index slumps amid risk-on market mood, clings to the 96.00 threshold

• The DXY slides some 0.39% but stays above the 96.00 figure as the New York session winds down.
• Positive Covid-19 news improved the market mood weakening the greenback.
• US Dollar Index (DXY) Price Forecast: Upward bias, though testing the bottom-trendline of the ascending triangle.

The US Dollar Index (DXY), which tracks the performance of the US dollar against a basket of six rivals, slides 0.39%, sits at 96.07 during the New York session at the time of writing. A risk-on market mood spurred by positive Covid-19 news.

A study made in South Africa reports that people infected with the Omicron variant are 80% less likely to be hospitalized. Additionally, in the last hour, the US Food and Drug Administration  (FDA) approved Pfizer’s Paxlovid pill for home treatment to treat high-risk patients.

Apart from this, the fall in US bond yields dented demand for US dollars, though it did not drag the USD/JPY to follow its steps. US Treasuries led by 10s, the 20s, and 30s, drop between two and a half and four basis points, sitting at 1.462%, 1.8846%, and 1.857%, respectively.

On Wednesday, the US macroeconomic docket featured the Gross Domestic Product for the third quarter. The annual base reading came at 2.3%, higher than the 2.1% estimated, while the quarterly based, uptick to 6.0%, better than the 5.9% foreseen. Furthermore, the Conference Board reported that Consumer Confidence in December rose by 115.8, more than the 110.8 estimated. Since July, it is the best mark before the Delta wave that weakened confidence in the Q3. 

US Dollar Index (DXY) Price Forecast: Technical outlook

The US Dollar Index daily chart depicts the strong dollar narrative keeps in place. The DXY broke below the central Pitchfork’s uptrend channel, which confluences with the ascending triangle on an uptrend. 

At the time of writing, the DXY is testing the bottom-trendline of the ascending triangle on an uptrend, threatening to break to the downside, which would invalidate the triangle formation sending the DX tumbling towards November 30, 95.55. 

To the upside, the first resistance would be the figure at 97.00. A breach of the latter would expose the June 30 high at 97.80, followed by the ascending triangle target at 98.00.