Insights 
VT 
Key Points:
- USDX heads for worst weekly loss since July, despite Friday’s mild bounce.
- Fed cut odds jump to 87% for December, up from 39% a week ago.
- CME FX trading glitch worsened low holiday liquidity, adding to the volatility.
The US Dollar Index (USDX) staged a modest rebound to trade at 99.599 on Friday, clawing back a portion of this week’s steep losses. But the bounce was hardly enough to reverse the broader damage, with the greenback still on track for its worst weekly performance since July 21, sliding nearly 1.4% at its lowest point.
The sharp shift was driven by a surge in market expectations for policy easing, after a string of weaker-than-expected US data from soft retail sales and deteriorating consumer confidence tilted sentiment in favour of the doves.
Fed Funds futures now price in an 87% chance of a 25-bps cut at the December 10 FOMC meeting, a major shift from just 39% a week prior, according to CME’s FedWatch tool.
Adding to the volatility was an unexpected trading outage at CME Group, which temporarily halted trading in major currency pairs during thin Thanksgiving conditions. The disruption exacerbated already low liquidity, leaving traders vulnerable to outsized moves across the FX space.
Technical Analysis
The US Dollar Index (USDX) is consolidating just beneath the 100 level, holding a modest uptrend after rebounding from the 95.81 low in September.
The chart shows a steady climb over the past two months, with price remaining above the 30-day moving average, which now acts as dynamic support.
However, upward momentum is starting to wane near the key resistance zone around 100–101, a level that has repeatedly capped advances since May.
The MACD indicator is flattening out just above the zero line, with the histogram showing slight bearish divergence. This suggests the rally may be losing strength, even though the broader trend remains constructive.
If USDX can break and close above 100.8, it would likely spark further bullish interest, targeting 101.5 next. But if the index dips below 99 or the 30-day average, short-term sentiment may shift toward consolidation or a mild pullback. For now, markets appear cautious, awaiting a decisive trigger.
Cautious Forecast
While the dollar may find brief reprieve in the 99.00–99.60 support range, the broader trend is beginning to fracture. With markets leaning heavily into a December rate cut and liquidity expected to remain patchy into year-end, upside conviction remains limited.
Unless US macro data surprises to the upside or Fed officials push back strongly against dovish bets, the dollar may continue grinding lower into December, particularly against higher-yielding and commodity-linked currencies.
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