US Dollar up with Nasdaq down

In today’s European morning, the US Dollar (USD) maintained a steady position, showing strength against most G20 currencies. However, the DXY US Dollar Index indicated a slight decrease, following a resurgence of risk-on sentiment in Monday’s US equity markets. Asian markets, particularly the Japanese Nikkei Index, echoed this positive trend, reaching a 34-year high at Tuesday’s close.

Economically, Tuesday’s agenda is light, with only minor data releases scheduled. Market participants are particularly interested in the speech by Federal Reserve Vice Chairman Michael Barr later in the day. Ahead of Thursday’s US Consumer Price Index (CPI) report, there are no significant events anticipated to influence the market.

Business optimism seems to be on the rise according to the National Federation of Independent Business (NFIB), which released its Business Optimism Index for December at 91.9, up from November’s 90.6. In Europe, ECB member Mário Centeno suggested that the ECB could make a rate decision sooner than May, citing positive December inflation figures. This led to a slight retreat of the Euro against the USD.

The US trade statistics were also released, showing a slight improvement in the Goods Trade Balance and the Goods and Services Trade Deficit for November. The US Redbook data indicated a rise from 5.6% to 5.9% in the first week of January. Later today, Barr is set to speak, and the US Treasury will allocate a 3-year note.

In the equity markets, Asian stocks performed well, but European stocks are uncertain, and US equity futures show a modest decline. The CME Group’s FedWatch Tool suggests a high likelihood that the Federal Reserve will maintain current interest rates in its upcoming January 31 meeting.

The US Dollar Index (DXY) is slightly stronger today, balancing between geopolitical tensions and risk-on sentiment. The DXY is expected to remain stable ahead of Thursday’s inflation data, barring any major unforeseen events.

Technically, the DXY faces resistance at 103.00 and the 200-day SMA at 103.43. A further barrier is seen at the 55-day SMA at 103.93. Conversely, a downward trend might test supports at 101.74 and near 100.80.