During the Asian trading session on Tuesday (December 2), the U.S. dollar index hovered narrowly around 99.43, temporarily halting its five-day decline. Technically, the dollar is showing signs of short-term strength, with price signals pointing upward—despite a macroeconomic backdrop that doesn’t support such a move. Monday’s ISM Manufacturing PMI reinforced the weak tone of U.S. data, revealing deeper contractions in new orders and employment sub-indices.
Meanwhile, market speculation is growing that President Trump may appoint Kevin Hassett as the next Federal Reserve Chair, a move widely perceived as highly dovish and aligned with Trump’s push for lower interest rates. These factors typically weigh on the dollar, yet price action suggests traders are leaning toward dollar strength rather than weakness.
This divergence between fundamentals and technicals is striking. While economic signals and Fed expectations point to looser policy ahead, the dollar’s technical charts tell a different story—key levels are holding firm, and bullish patterns are emerging across major currency pairs. Currently, price signals on the dollar index chart suggest a potential rebound, further supporting the case for short-term strength.
**Is the Dollar Index’s Bearish Breakout a Fake?** Though it may still be early, doubts are emerging about whether the bearish breakout on the daily chart will sustain. Prices rebounded swiftly after testing the 50-day moving average (99.10), with the subsequent reversal forming a bullish hammer candlestick—a sign of short-term upside potential. On the upside, the previous resistance trendline above 99.50 will be a critical level to watch. A sustained breakout above this trendline could reinforce bullish momentum, with the 200-day moving average (99.60) serving as the next resistance for long positions. If the dollar index successfully breaches the 200-day MA, the 100.25 resistance level would become a clear target—the same area where last November’s rally stalled.
While price action suggests short-term upside risks for the dollar index, it has yet to reclaim its prior uptrend line. If the rebound stalls near current levels, downside potential remains. On the lower end, the zone around the 50-day MA and the 99.00 support level offers initial support; further declines could test 98.60 and 98.08.
Oscillators are sending neutral signals, making price action itself more decisive for directional cues. The RSI (14) sits slightly below the neutral 50 level, while the MACD remains in positive territory—offering no clear directional bias.
*(Dollar Index Daily Chart, Source: Yi Hui Tong)* As of 10:22 Beijing time, the dollar index stands at 99.42.
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