It’s a packed session for central banks in Europe, with the ECB and Bank of England both delivering policy decisions, alongside rate calls from the Riksbank and Norges Bank. On top of that, the US calendar brings and weekly just ahead of the ECB press conference — timing that naturally puts firmly in the spotlight.
Risk sentiment was slightly brighter this morning. US index futures were higher, and European equities were following suit, a day after tech stocks dragged Wall Street lower. The mood shift was partially due to an upbeat outlook from , the largest US memory-chip maker, which, for now, has helped to pause a tech-led selloff.
Focus Turns to CPI
Attention for US traders now turns to today’s US inflation print, with traders looking for clues on the Fed’s next move. That said, this release comes with a health warning. Government shutdown disruptions mean the data may be less reliable than usual.
for November is expected at 3.1% year-on-year, up from 3.0% in September. If expectations are correct, then this will feed into the ongoing “sticky inflation” narrative. Even so, it’s unlikely to force a meaningful rethink of the . The report only provides a partial picture, with missing monthly changes across several categories after data collection issues in October and delays again in November.
Inflation Data Unlikely to Be Game-Changer
So far this week, US events have barely shifted the needle for FX markets. That includes yesterday’s comments from Fed Governor Chris Waller, who struck a broadly dovish tone, pointing to labour market softness and suggesting rates are still 50–100bp above neutral. Still, he showed no urgency to cut. Markets are pricing only a 25% chance of a January move, with March seen as the next likely FOMC meeting where we could see a cut.
Unless we see a surprise spike in weekly jobless claims, it’s hard to see today’s US data moving the US dollar in a meaningful way. Perhaps rate decisions and rate signals about 2026 from the likes of the ECB and BoE will be far more important for the US dollar Index trajectory than the US events today. If the ECB is deemed to be more hawkish than expected, this could be the trigger behind the next wave of US dollar-selling.
US Dollar Index Technical Analysis and Levels to Watch
Ahead of the abovementioned macro events, the was up for the second day, though it has been trending lower over the past few weeks, posting a sequence of lower highs and lower lows after failing to break above key resistance around the 100.00 to 100.40 resistance area in November.
This is also where the prior recovery had stalled back in August, too. Since peaking again around this same area in November, the US dollar index has broken through several support levels, first at 99.00 and more recently around 98.60.
These former support levels have now become important short-term resistance levels to watch. As long as they hold, the technical path of least resistance on the US dollar will remain to the downside, despite its slight recovery so far this week. That said, a decisive break back above either of these levels, especially 99.00, could trigger a short-squeeze rally back towards the top of the range again.
On the downside, initial support comes in around the 98.00 level. This area has held in the past and also aligns closely with the 61.8% Fibonacci retracement at 97.81, which I’ve highlighted in blue on the chart. Below this zone, there isn’t much in the way of clear support until around 97.00. Beyond that, the next key area to watch would be the range lows from July and September, between roughly 96.20 and 96.40.
Overall, the US dollar index remains within a broader consolidation range, but near-term momentum continues to point lower. For that reason, I will maintain a bearish bias on the US dollar index unless and until the charts tell us otherwise, and/or we see a sudden shift in the macro environment in favour of the US dollar.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.