As the chart of the US Dollar Index (DXY) shows, today the value is sitting near an important resistance level around 100.20 points. We highlighted this level earlier — including in our analytical post from 10 November.

Fluctuations in the USD against other currencies are forming a configuration of two channels:

→ A blue bullish trajectory that began back in September. However, this resistance level appears to be a significant obstacle. Last week, the bulls attempted to push the DXY to a six-month high, but they failed to hold those gains.

→ A red alternative bearish trajectory, which may become more pronounced and relevant if the bears seize the initiative once it becomes clear that the bulls are running out of steam.

At the start of the week, the index is also moving within a narrowing triangle — the breakout direction may indicate the key trend into the year-end.

The balance between the two scenarios will largely depend on the fundamental backdrop, with traders mainly focusing on:

→ News related to the prospects of a Federal Reserve rate cut. Barclays analysts expect the Fed to cut rates in December.

→ A possible intervention by the Bank of Japan to support the weakened yen, which has come under pressure due to low domestic interest rates. Japan’s Finance Minister, Satsuki Katayama, reinforced this rhetoric last week.

→ The release of data — including US retail sales and producer prices — which were postponed due to the record-long government shutdown.

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