Insights 
VT 
The US Dollar Index (USDX) managed a modest recovery on Friday, edging up to 99.599 and reclaiming part of the heavy losses accumulated earlier in the week. Even so, the uptick did little to offset the broader decline, with the greenback still heading for its weakest weekly showing since 21 July, having fallen nearly 1.4% at its lowest point.
The dramatic shift in sentiment came as traders sharply increased their expectations for monetary easing, following a run of disappointing US data, including softer retail sales and weakening consumer sentimen, which collectively bolstered the dovish outlook.
Fed Funds futures are now assigning an 87% probability to a 25-basis-point cut at the 10 December FOMC meeting, a substantial jump from just 39% a week earlier, according to CME’s FedWatch tool.
Further adding to the turbulence was an unexpected outage at CME Group, which briefly suspended trading in major FX pairs during the thin Thanksgiving session. The disruption intensified already-fragile liquidity conditions, leaving markets susceptible to exaggerated swings across the currency complex.
Technical Analysis
The US Dollar Index remains in consolidation just below the 100 threshold, maintaining a gentle upward bias after rebounding from September’s 95.81 low.
The chart reflects a gradual ascent over the past two months, with the index holding above the 30-day moving average, which continues to function as dynamic support.
However, momentum is beginning to soften near the important resistance band around 100–101, a region that has repeatedly curtailed rallies since May.
The MACD indicator is flattening out just above the zero line, with the histogram showing slight bearish divergence. This suggests the rally may be losing strength, even though the broader trend remains constructive.
If USDX can break and close above 100.8, it would likely spark further bullish interest, targeting 101.5 next. But if the index dips below 99 or the 30-day average, short-term sentiment may shift toward consolidation or a mild pullback. For now, markets appear cautious, awaiting a decisive trigger.
Cautious Outlook
Although the dollar may find short-term support within the 99.00–99.60 region, the wider trend is starting to show signs of strain. With markets heavily skewed towards expecting a December rate cut and liquidity likely to remain uneven into the end of the year, conviction on the upside remains limited.
Unless US economic data markedly outperforms or Federal Reserve officials push back forcefully against the dovish pricing, the dollar may continue to drift lower into December, particularly against higher-yielding and commodity-driven currencies.
