The US dollar is unchanged after the Richmond Fed confirmed that production will remain on a downward trend in December

The US dollar remains sideways and unaffected by headlines from China reporting increased bond sales next year.
Chinese policymakers plan to sell a record 3 trillion yuan of special government bonds in 2025, the highest ever.
The US Dollar Index (DXY) is holding above 108.00, very close to hitting a fresh two-year high.

The US Dollar (USD) is trading modestly higher on Tuesday, with the DXY Index trading just above 108.00 as markets begin to relax heading into Christmas. Reuters reported on Tuesday that the dollar did not gain much in value despite news that Chinese policymakers were considering selling nearly 3 trillion yuan (CNH) of special government bonds in 2025. The additional capital should stimulate the slowing and sluggish Chinese economy.

The U.S. economic calendar is very clear on Tuesday, with only petite indicators such as the Philadelphia Fed’s non-manufacturing activity index and the Richmond Fed’s regional manufacturing index survey for December. One of the main takeaways from the last few December data is that the U.S. manufacturing sector is sounding the alarm, with several indicators confirming that the sector is slipping into further contraction.

Daily summary of market movers: Richmond Manufacturing confirms decline

Reuters reported on Tuesday that China’s policymakers plan to sell a record 3 trillion yuan ($411 billion) of special government bonds in 2025. According to Reuters, the government is trying to support consumption subsidies, business equipment upgrades, as well as investments in key technologies and advanced manufacturing sectors.
French Prime Minister Francois Bayrou intends to reach an agreement with parliament on the 2025 budget, which would reduce the deficit to nearly 5%, close to the level of his predecessor Michel Barnier, Bloomberg reports.
The Philadelphia Fed’s non-manufacturing activity index for December was released around 1:30 p.m. GMT. The actual number was -6 compared to the previous reading of -5.9.
The Richmond Fed Manufacturing Index is at -10, below the expected -9, at -14.
Asian stocks are recovering after an expected 3 trillion yuan injection from China. Europe is rather struggling to benefit from this tailwind and still looks sluggish. US futures are in green.
The CME FedWatch Tool for the first Fed meeting of 2025 on January 29 projects a 91.4% chance of stable interest rates compared with a slim 8.6% chance of a 25 basis point rate cut.
The US benchmark 10-year bond rate is 4.59%, which is last week’s high.

US Dollar Index Technical Analysis: Over

The US Dollar Index (DXY) is trading in a fairly tight range on Tuesday. More and more traders will not be participating in the markets today, which will mean almost no price reaction unless a gigantic headline breaks. So it looks like DXY will close Christmas Eve very close to its highest level in two years.

On the other hand, the trendline starting December 28, 2023 acts as a moving upper boundary. The next sturdy resistance comes at 109.29, which was the July 14, 2022 high and has a good history as a key level. Once this level is exceeded, the round level of 110.00 comes into play.

The first downward barrier appears at 107.35, which has now changed from resistance to support. The second level that could stop the selling pressure is 106.52. From here, even the 105.53 level could be considered, while the 55-day basic moving average (SMA) at 105.23 is heading higher towards this level.

US Dollar Index: Daily Chart