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The US Dollar (USD) has rebounded after an initial dip, stabilizing around 106.50 on the US Dollar Index (DXY), which measures the USD against six major currencies. Early losses, triggered by positive German election results for the Christian Democratic Union (CDU), quickly subsided as the outcome eased market anxieties about political instability.
The DXY recovered from losses seen in Asian trading as the German election results reduced political uncertainty and dampened the Euro’s rally. The CDU’s leading position in the German elections calmed market concerns.
Looking ahead, investors are focused on several key US data releases this week. Fourth-quarter 2024 Gross Domestic Product (GDP) figures are due on Thursday, followed by January Personal Consumption Expenditures (PCE) data on Friday. These reports will provide crucial insights into economic growth and inflation trends.
The Chicago Fed National Activity Index for January, also releasing on Monday, will offer further indications of economic activity. Personal income and spending data will be released alongside the PCE figures. The Q4 GDP figures are expected to confirm continued economic growth, reinforcing a positive outlook for 2025.
From a technical perspective, the DXY is attempting to stabilize around 106.50 and reclaim the 100-day Simple Moving Average (SMA) at 106.60. Despite the recent rebound, technical indicators remain somewhat weak. The Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) suggest lingering bearish sentiment, though some signs of recovery are emerging. Resistance is seen at 107.00, with support holding around 106.00. A break above 106.60 could signal a potential shift in momentum, but the upward trend remains fragile at this point.
