DXY Recovers Despite Weekly Decline

The dollar steadied on Friday, but was on track to end the week lower after a six-week winning streak, while investors turned their focus to Donald Trump’s presidential inauguration and awaited the incoming administration’s policies.

Earlier during the North American session, the US Dollar was easing in the last trading session before President-elect Donald Trump’s inauguration, with markets uncertain about what to do next.

Federal Reserve Governor Christopher Waller’s comments on a March rate cut have left traders clueless. The US economic calendar is slim, with housing data for December on the agenda. The Trump administration has confirmed executive orders, including fiscal measures, tariff levies, and stimulus packages, which are expected to have an inflationary impact.

US Building Permits and Housing Starts for December were released, with permits and housing starts rising. US Industrial Production data was 0.9%, beating the forecast. The CME FedWatch Tool projects a 97.3% chance that interest rates will remain unchanged in the January meeting.

The US 10-year yield is trading around 4.596%, down near 4.5% from its Tuesday’s peak. The key resistance is the 110.00 psychological level, with the next big upside level being 110.79. The DXY is testing the ascending trend line from December 2023, with support at 108.95 and 107.35.