Published: 9 January 2026,06:54
Daily Market Analysis New
Key Takeaways:
*The U.S. dollar is holding above critical 98–99 support, but resilience is driven more by positioning and event risk than improving fundamentals.
*Labor data signals a fragile “no-hire, no-fire” economy, with rising layoffs and deteriorating job sentiment masking headline stability.
* Fed rhetoric has shifted decisively dovish, with officials openly discussing up to 150bps of rate cuts in 2026 as policy remains overly restrictive.
The U.S. Dollar Index (DXY) has stabilized near the critical 98–99 support zone, rebounding modestly as markets position cautiously ahead of Friday’s Non-Farm Payrolls report and a potentially market-shifting Supreme Court ruling on U.S. tariff authority. While near-term flows favor the dollar amid geopolitical uncertainty and defensive positioning, the broader macro backdrop remains increasingly conflicted.
Recent labor data presents a “no-hire, no-fire” economy. Weekly jobless claims remain historically low, and December job cuts fell sharply month-on-month, suggesting limited immediate stress. However, annual layoffs surged to their highest level since 2020, while Q4 job cuts marked the worst fourth quarter since the Global Financial Crisis. Survey data reinforces this divergence: job-finding expectations have collapsed to record lows, delinquency risks are rising, and household credit stress is building beneath the surface.
Monetary policy expectations are now the dominant driver. Fed officials, including Miran, have openly discussed the need for up to 150bps of rate cuts in 2026, warning that policy remains materially restrictive and risks damaging the labor market. Treasury Secretary Bessent echoed this view, arguing rates are still well above neutral. While futures price January holds, markets increasingly anticipate a structural easing bias, especially as inflation expectations remain anchored near 3% beyond the one-year horizon.
Fiscal and political risks further complicate the dollar outlook. Trump’s proposal for $200bn in MBS purchases, combined with expectations of more populist fiscal policy ahead of the 2026 election cycle, raises concerns about long-term dollar credibility. Meanwhile, tariff uncertainty and potential refunds introduce volatility into trade flows and Treasury yields.
The dollar retains short-term support from positioning and event risk, but medium-term fundamentals remain fragile. A sustained break below the long-term 98 support would signal a regime shift toward weaker USD conditions, especially if labor data disappoints or rate-cut expectations accelerate.
Technical Analysis
The Dollar Index is showing signs of a near-term trend recovery after breaking above the descending trendline that had capped price action since late November. This breakout marks a potential shift from the prior corrective structure toward a more constructive bias. Price has reclaimed the 98.75–98.80 region, which previously acted as resistance and is now functioning as short-term support. As long as DXY holds above this level, the immediate outlook remains tilted to the upside, with price attempting to re-establish a sequence of higher highs and higher lows.
Momentum indicators are supportive but not yet aggressive. RSI has pushed into the mid-to-high 60s, reflecting strengthening bullish momentum without reaching overbought conditions. This suggests buyers are gaining control, though upside acceleration may still require follow-through above nearby resistance levels. MACD confirms this improving tone, with a bullish crossover in place and histogram bars expanding modestly above the zero line, indicating growing positive momentum.
Overall, as long as DXY remains above former trendline resistance, pullbacks are likely to be viewed as corrective within an emerging bullish structure rather than the start of a renewed downtrend.
Resistance level: 99.25, 99.70
Support level:98.75, 98.10
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