• On Friday, DXY is trading near 107.90 in a narrow range.
• Shopping malls remain understaffed, contributing to subdued trade.
• Holiday momentum keeps the dollar high in behind schedule 2025.

The U.S. Dollar Index, which measures the value of the U.S. dollar against a basket of currencies, was trading in a very tight range on Friday, remaining near the 108.00 level. Markets remain cautious, with tough end-of-year trading conditions limiting volatility. Incoming data from Japan and China indicated a further slowdown in industry, but the dollar remains in a robust position. Despite profit taking after last week’s gains, the US dollar continues to rise as investors return from Christmas.

Daily summary of market movers: The US dollar has solid growth prospects

• The risk of a government shutdown increases after House Republicans failed to pass a funding deal. Historically, brief shutdowns have had circumscribed economic impact, and the Treasury Department had room to maneuver before default risks escalated.
• Longer-term yields continue to rise. The yield on 10-year Treasury bonds is around 4.60% and on 30-year bonds at 4.77%, which is the highest level not seen since May.
• The U.S. dollar is on track for nearly 7% annual growth as investors expect robust U.S. growth and circumscribed rate cuts in 2025 and Fed Chairman Jerome Powell signals caution on further monetary easing.
• Chinese stimulus measures and deposit rate cuts have supported local markets, but the dollar is shrugging off these developments, remaining broadly competitive through the end of the year.

DXY Technical Outlook: Indicators continue to trend upward

The dollar index continues its bullish momentum with indicators pointing higher and approaching overbought levels. Despite low trading liquidity, DXY continues to rise near 108.00, reflecting continued buying interest. As long as the index remains above 106.00, the technical picture remains positive.