The dollar remains unchanged before a weekend full of uncertainty about the French budget

The U.S. dollar is falling on Friday, with markets nervous about budget talks in France that could topple the government.
Monday’s opening could be uncertain if French Prime Minister Michel Barnier is unable to secure an agreement with the far-right National Rally party.
The US Dollar Index is back above 106.00 and is looking for a daily and weekly close above this level to ensure further growth next week.

The US dollar (USD) is recovering as the US trading session opens on Black Friday. The euro’s rally, which has been weighing on the US dollar and the US dollar index (DXY), is fading as the US trading session begins.

Budget talks in France are not going well, with Prime Minister Michel Barnier having to agree to too many demands from Marine Le Pen of the far-right National Rally. Budget concerns are pushing French bond yields to levels in line with weaker European peripheral countries such as Greece, fueling the strengthening of the euro against the US dollar.

Meanwhile, US financial markets will close early on the Friday after Thanksgiving. US stock futures remain flat while the US bond market opens with little liquidity.

Daily summary of market players: France will sink or save the euro on Monday

Far-right National Rally leader Marine Le Pen, who wields enormous influence in France’s divided parliament, has given Prime Minister Michel Barnier until Monday to kneel to her budget demands before deciding to overthrow the government, Bloomberg reports.
According to Reuters, Prime Minister Barnier agreed on Thursday to abandon plans to escalate taxes on electricity.
Stock markets will close this Friday with slight gains in both Europe and the US, despite low liquidity on Black Friday.
The CME FedWatch Tool estimates the Fed’s next 25 basis point (bps) rate cut at its December 18 meeting at 66.3%. The chance of leaving rates unchanged is 33.7%. The Fed’s protocols helped escalate the chances of interest rate cuts in December.
The benchmark US 10-year bond rate is 4.19%, falling to the lowest level this week after closing on Thursday early Friday.

US Dollar Index Technical Analysis: DXY Prepares for Final Weeks of 2025

The US Dollar Index (DXY) will come under more selling pressure on Friday, with one of its main components, the euro, weighing on the index. As French yields and spreads escalate, the interest rate differential between the U.S. and Europe is narrowing and the euro is catching up with the U.S. dollar. Key levels of support need to be identified as “Trump trade” will soon escalate again when President-elect Donald Trump takes office in January.

With DXY falling this week, previous support levels have now turned into resistance. On the other hand, the first level to watch is 106.52 (the April 16 high). If the dollar bulls regain this level, 107.00 (round level) and 107.35 (October 3, 2023 high) will reach the target level again and a retest will occur.

If the DXY correction continues, the key level at 105.53 (April 11 high) will come into play on Friday as the last man standing before heading into the 104 region. If DXY falls all the way to 104.00, a large number and 200 -The daily straightforward moving average at 104.03 should trap any descending knife formation.

US Dollar Index: Daily Chart