US Dollar advances on rising US yields ahead of key data

The US Dollar is having an uptrend, with the index currently trading up to the 103.70 level. This comes in anticipation of upcoming key inflation data and the impact of rising yield as markets reduced their dovish bets on the Fed.

The US economy is thriving as traders await key data and central bank meetings. Despite a lack of major data or Fed speakers, the market has lowered its easing expectations to around 125 bps over 2024, aided by the recovery of the Greenback.

On Thursday, the US will release December Personal Consumption Expenditures data, which is expected to show inflation has stagnated. Additionally, Q4 GDP figures are due, and markets expect economic activity to have cooled off. US bond yields are rising, with the 2-year yield at 4.40%, the 5-year yield at 4.06%, and the 10-year yield at 4.15%.

The technical analysis indicates that the DXY index has recovered the 200-day SMA, with bulls finding a lift. The Relative Strength Index (RSI) is positive, indicating sustained buying pressure, while the Moving Average Convergence Divergence (MACD) shows a balance in buying and selling pressures.