The DXY Index trades just below the 200-day SMA as bulls are struggling to hold their ground.

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• The DXY Index trades just below the 200-day SMA as bulls are struggling to hold their ground.
• Existing Home Sales from December were weak, while the University of Michigan Consumer Sentiment arrived better than expected.
• Dovish bets on the Fed remain high.

The US Dollar (USD) is seen neutral by the end of the week and currently tallies a 0.90% weekly gain. Strong University of Michigan (UoM) data is keeping the USD afloat, but steady dovish bets on the Federal Reserve (Fed) limit the upward potential.

The US economy appears overheated, tempering the market’s dovish expectations, although the chances of interest rate cuts in March and May lingers at around 50%. Thus, the US dollar remains in fluctuating currents, affected by both resilient economic performance and dovish bets on the Fed’s likely moves.

The Relative Strength Index (RSI) showcases an upward slope, residing well within positive territory, which generally denotes bullish strength. This is concurrent with the Moving Average Convergence Divergence (MACD), which, propelled by the rising green bars, indicates strong buying momentum. However, those indicators are starting to flatten as the index tallied a five-day winning streak.

Reflecting upon the Simple Moving Averages (SMAs), the index holds a position above the 20-day average, denoting an undercurrent of bullish dominance in the immediate short term. However, if the bulls fail to regain the 200-day SMA, more downside may be on the horizon.

Support levels: 103.20, 103.00, 102.80.
Resistance levels 103.40 (200-day SMA), 103.60, 103.80.

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