Currently, US Dollar Index is trading at 101.18, down -0.18% on the day, having posted a daily high at 101.65 and low at 100.84.
Trump, tweets, delusions
Barbara Rockefeller, President at Rockefeller Treasury Services, about the US economy in general notes, "US politics is so awful that it's hard not to attribute just about everything—gold is up! Stocks are down!—to Trump and his lies, tweets, and delusions. But we should be careful. The dollar rally actually started back in May as the Fed rate hike was anticipated, then shot down for September, then revived for December. Policy divergence was the main theme, and Mr. Draghi obliged. For the dollar to be retreating now from a spectacular rise is only normal. The market is sulking because it wants a constant diet of shiny new things. Just wait—we will get them."
The foreign exchange veteran concludes, "And data is, as always, backward-looking. The Dec retail sales report today, for example, expected to be strong (up 0.7% after 0.1% the month before), is still not a verdict on Trumpism. Dec is often a strong month because of auto sales and Christmas. We can't give credit where it's not due. We also get the University of Michigan confidence reading, and this time we want to watch the inflation expectations component, revised last month to a new low of 2.3%. Surely it's higher now? We're not going to men-tion PPI, which in the US does not feed CPI."
US Dollar Index Technical Levels
Almost there, as 'there' means +0.20 points from closing below 101.00 round figure. Not only the first narrative fades but a technical perspective on the daily chart adds more fuel to burn for a deeper pullback. A close and open below 50 SMA (blue color) would open doors to trade lower; how low? There is evidence to see the dollar index back at 99.30/10 range. If things get ugly, 98.50/20 around its 100 SMA (red color) seems the perfect place to find a bottom.
To the upside, in the absence of bullish patterns, 101.88 immediate resistance makes a strong case for challenging the current bearish gravity. If bulls can break that wall, 102.50 is up as the next rival to defeat.