The US dollar index or it is also known as DXY confirmed its support level in the 104.40s. It was following the release of better United States Gross Domestic Product (GDP) data in the New York session last night.
The greenback also knocked out several other major currencies, particularly the Aussie and Sterling dollars. Nevertheless, momentum for the rally remains nil amid a lack of market activity ahead of Christmas celebrations.
The two most recent America's economic data showed resilience that exceeded market expectations. United States GDP increased by 3.2 percent for quarter over quarter.
It was happened in the third quarter of 2022. That number was more mighty than the previous estimate of only 2.9 percent For quarter over quarter period too.
Jobless Claim Rose by 216k
Meanwhile, the latest number of jobless claims increased by 216k, or slightly better than the consensus estimate of 222k. Some have worried that the Fed's interest rate which has now reached a record high since 2007 will halt economic growth.
However, these data shrink those concerns. The resilience of the United States economy actually supports the Federal Reserve's intention to raise interest rates further.
That raise was at least 75 basis points by 2023. The dollar strengthened as better than expected (United States GDP) data supported interest rate expectations for the new year.
This was said by Karl Schamotta, a chief market strategist at Corpay as reported by Reuters. However, it is for sure that the data can move again based on certain situations.
Central Bank may Tighten their Monetary policy
There is no evidence yet that the Federal Reserve's rate hike is resulting in a 'period of growth below a sustained trend' that policymakers and market participants are concerned about.
That is why; the central bank is more likely to tighten their monetary policy further. The GBP/USD became the main currency pair most squeezed by the rise of the US dollar.
The BoE's interest rate policy is relatively more conservative than the Fed's. Meanwhile, the sluggish condition of the UK economy is also unable to support the pound sterling exchange rate.
Unfortunately, the global situation hindered the greenback's rebound efforts against the other two main rivals. The policy announcement of the European central bank and Japan some time ago became very surprising news for most market participants.
USD/JPY Climbs Slightly
Many of the market participants are still adjusting their trading positioning in a more optimistic direction for the euro and yen. They saw everything based on the updates.
When this news was written at the end of Friday's Asian session (23/December), EUR/USD was still circulating in the 1.0600 range that had been inhabited for the past six trading days.
USD/JPY is climbing slightly, but has not been able to recover from the four percent slump that occurred on Tuesday. The yen has room to strengthen significantly from here.
That was said by Michael Brown as an analyst at Trader X. He thought that the dollar-yen has room to pull back towards the mid-120s, around 125 or 126. This was as the BoJ becomes more hawkish. It was also because the market continues to doubt what people hear from the Fed.
USD/CHF Supported by CCI Indicator
The US Dollar currency pair against the Swiss Franc (USD/CHF) over the past few weeks the price has moved Bearish. The price moved from resistance level 2 (0.95490), until it broke through resistance 1 (0.94356), and support 1 (0.93235).
However, the weakening price in the H4 timeframe has not yet managed to break through support level 2 (0.92146). The USD has the potential to rebound towards support 1.
This opportunity will be even stronger if the price manages to break through and close above the level of 0.929. In addition, this opportunity is supported by the Commodity Channel Index indicator.
