US Dollar Index defends 96.00 amid steady yields, quiet markets

• DXY picks up bids to refresh intraday high.
• Omicron news, US retail sales updates and stimulus hopes favor sentiment.
• US Treasury yields challenge pullback from two-week top amid lack of major data/events.
• Second-tier data from the US, risk catalysts may entertain traders but no major surprise expected amid holiday mood.

US Dollar Index (DXY) refreshes intraday high to 96.12, up 0.05% on a day, during an inactive Asian session on Tuesday.

The greenback gauge tracks the US Treasury yields to consolidate the recent losses amid a lack of major catalysts. Even so, Omicron-linked optimism joins hopes of further stimulus to weigh on the quote.

That said, the US 10-year Treasury yields seesaw around 1.48% after the 1.7 basis points (bps) of a decline the previous day. It’s worth noting that the S&P 500 Futures also print mild losses around 4,775 after the Wall Street benchmark refreshed the record on Monday. The same adds to the DXY’s corrective pullback.

Talking about macros, markets remain hopeful of fewer hospitalizations due to the South African covid variant, namely Omicron, even as the global infections numbers rise faster. Also on the positive side were the strong US retail sales during the holiday season, via online, as well as a reduction in the isolation and quarantine period for the general population from the previous 10 to five by the US Centers for Disease Control and Prevention (CDC).

Elsewhere, the headlines from the People’s Bank of China (PBOC) and the Chinese Finance Ministry, suggesting further easy money to help sustain the growth of the world’s second-largest economy, also favored the risk appetite.

Furthermore, ongoing talks over Iran’s denuclearization and a global push for peace between Russia and Ukraine also seem to have offered relief to the markets.

It should be noted that the year-end holiday mood dominates in the markets and reduce the volatility. Even so, US housing and Richmond Fed Manufacturing data could entertain the traders while headlines concerning Omicron and other risk catalysts can offer extra directives.

Technical analysis

Although DXY bounces off the monthly support line, around 96.00 at the latest, the recovery moves remain capped by a descending trend line resistance from December 15, surrounding 96.35.