US Dollar attracts buyers as attention shifts to Trump

President-elect Donald Trump is expected to unveil a series of executive directives aimed at accelerating fiscal, tariff and stimulus measures.
Solid housing construction data, including rising approvals and housing starts, suggest the U.S. economy will enter the up-to-date year on solid footing.
Markets are assessing guidance from fresh Fed officials.

The US Dollar will continue to consolidate at current levels on Friday, with the US Dollar Index (DXY) holding around 109.00 and looking for direction. Markets are left reeling following comments from the Federal Reserve’s (Fed) Waller suggesting a March rate cut is still likely, while markets evaluate fresh lower-level data ahead of Trump’s inauguration.

Daily Market Change Summary: USD Recovers Ahead of Trump’s Inauguration, Fed Signals

Fed Governor Christopher Waller struck a more dovish tone, emphasizing favorable inflation performance that could justify a rate cut in the near future, and mentioned that a rate cut in March remains possible if incoming data supports continued price moderation.
Treasury Secretary nominee Scott Bessent stressed the need to maintain the U.S. dollar’s status as the global reserve currency and defended the idea of an independent Federal Reserve, while suggesting that any pass-on of tariffs to consumer prices could be partially offset by changes in exchange rates.
On the data side, minor data including building permits and housing starts exceeded many analysts’ expectations, while industrial production rose sharply, highlighting continued U.S. economic momentum.
Stock markets remain buoyant, with U.S. stocks gaining more than 1% on the day, potentially reflecting optimism about the up-to-date administration’s aggressive policies.
The CME FedWatch Tool shows about a 97% chance that rates will remain unchanged at the upcoming policy meeting as the central bank waits to interpret up-to-date data and evolving policy factors.

DXY Technical Outlook: Rebound from Profit Taking, Waiting for Multi-Year Highs

After profit taking briefly pushed the dollar lower, the US dollar index managed to regain territory above 109.20. Despite sporadic sell-offs, DXY remains near multi-year highs and fundamental indicators continue to support the dollar’s uptrend. Importantly, the 20-day plain moving average deterred sellers, providing a solid foothold for bulls.

While a short-term decline is likely if up-to-date data or political announcements disappoint, the prevailing technical structure suggests buyers may quickly return to the market to defend the dollar’s momentum.