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US Dollar Index drops below 96.70 as T-bond yields extend decline

  • Chicago Fed's National Activity Index improves in November.
  • T-bond yields fall on Monday, 30-year references drops below 3%.

After closing the previous week near the 97 handle, the US Dollar Index, which measures the dollar's value against a basket of six major currencies, lost its traction on Monday and was last seen down 0.28% on the day at 96.68.

Although thin market conditions and a lack of significant macroeconomic data releases ahead of the Christmas holiday let the FX markets stay relatively muted on Monday, another sharp fall witnessed in the U.S. Treasury bond yields weigh on the greenback. At the moment, the 10-year T-bond yield is down 0.9% on the day at 2.767% while the 30-year reference is near the 3% mark for the first time since August and losing 0.7%.

The only data from the U.S. on Monday showed that the Chicago Fed's National Activity Index rose to 0.22 in November from October's flat reading. "Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.22 in November from a neutral reading in October," the bank said in its publication.

Later in the day, investors will be monitoring T-bond yields' and Wall Street's performance but the DXY is likely to stay in its range.

Technical levels to consider

The initial resistance for the index aligns at 97.00 (psychological level/Dec. 21 high/20-DMA) ahead of 97.30 (Nov. 30 high) and 97.70 (Nov. 12 high/2018 high). On the downside, supports are located at 96.60 (50-DMA), 96.15 (Dec. 20 low) and 95.70 (Nov. 7 low).

The United States Economy and Politics in 2019.

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