Published: 23 December 2025,03:53
Daily Market Analysis New
Key Takeaways:
*Dollar extends losses as markets price in a more dovish Fed policy path into 2026
*U.S. inflation cools faster than expected, dragging Treasury yields lower
*Focus turns to Core PCE, the final key U.S. data release of 2025
Market Summary:
By the end of the Christmas week, the U.S. dollar has continued to extend its losses, as markets remain focused on increasingly dovish expectations for the Federal Reserve’s policy path into 2026. Although the dollar briefly climbed to a one-week high on Friday amid bargain buying, the rebound proved short-lived, with follow-through demand failing to materialize.
Support levels and bargain-hunting flows have repeatedly failed to stabilize the greenback, leaving the broader downtrend intact. As the U.S. government shutdown came to an end, a backlog of delayed economic data was released, but the figures largely disappointed investors and reinforced concerns over the underlying strength of the U.S. economy.
Cooling inflation has direct implications for the dollar through the interest-rate channel. When inflation moderates more rapidly than expected, markets tend to price in a greater scope for rate cuts, pushing U.S. bond yields lower and eroding the dollar’s yield advantage. Following the inflation release, the U.S. 10-year Treasury yield slipped to around 4.13%, while the dollar index fell toward the 98.2 area, highlighting the close link between yields and currency performance.
Adding to the pressure, the Federal Reserve delivered a 25-basis-point rate cut in December and reiterated that future policy decisions would remain fully data-dependent. This reinforced expectations that the tightening cycle is firmly over and that the next phase of policy will likely remain accommodative.
Looking ahead, market attention turns to the final major U.S. data release of 2025—the Core PCE Price Index—due later today. As the Fed’s preferred inflation gauge, the report is expected to play a key role in shaping near-term dollar direction, particularly in thin holiday trading conditions.
Technical Analysis
The dollar index remains under pressure, extending its losses and currently testing the key support level at 98.10, a pivotal zone for near-term direction.
A decisive break below 98.10 would confirm a continuation of the broader bearish structure and likely trigger a fresh leg lower toward the next support at 97.55. Momentum indicators reinforce the downside bias, with MACD showing increasing bearish momentum and RSI at 36, firmly below the midline, signaling sustained selling pressure.
However, if downside momentum fails to follow through and the 98.10 support holds, a technical rebound may unfold. In that scenario, the index could retrace higher to retest resistance at 98.55, where selling interest may re-emerge.
Traders should closely monitor price action around the 98.10 support, as a confirmed breakout or rejection is likely to provide clearer short-term directional signals.
Resistance Levels: 98.55, 99.05
Support Levels: 98.10, 97.55
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