US Dollar strengthens near four-month highs with US inflation in focus

• The US Dollar trades in the green across the board on Monday.
• The focus will be on the US inflation data for October later this week. 
• The US Dollar index pops above 105.00 and is ready to test resistance levels. 

The US Dollar (USD) starts the week on the front foot and strengthens on Monday,  with the US Dollar Index (DXY) edging higher above the 105.00 level. The positive undertone for the Greenback is supported by the increasing likelihood that the Republican Party will win a majority in the US Congress after President-elect Donald Trump has already won the presidency and the Republicans secured a majority in the US Senate. The vote count for the House of Representatives is still ongoing, with only four more seats needed for the Republicans to win it. 

The US economic calendar is empty on Monday in observance of Veteran's Day. Stock markets in the US will remain open, but bond markets will be closed. 

Later in the week, investors will pay close attention to speeches from several Federal Reserve (Fed) officials, including Fed Chair Jerome Powell, and the US Consumer Price Index (CPI) data for October, which will be published on Wednesday.

Daily digest market movers: Off to a positive start

• Due to the Veterans' Day bank holiday, expect low volatility and volumes as US bond markets remain closed on Monday. 
• All equities are off to a good start this week. European equities are surging over 1%, while US equity futures are in positive territory ahead of the opening bell. 
• The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 68.5%. A smaller 31.5% chance is for rates to remain unchanged. 
• The US 10-year benchmark rate trades at 4.30%, and the bond market remains closed on Monday.

US Dollar Index Technical Analysis: Here comes resistance again

The US Dollar Index (DXY) pushes higher on Monday after headlines over the weekend that President-elect Trump has won the last remaining swing state in the US election and has secured a substantial landslide victory. Should the House of Representatives, where counting is still ongoing, fall in the hands of the Republicans, expect another push higher in the DXY once the headline breaks and is confirmed by several media outlets. 

The first level to watch out for on the upside is 105.53 (April 11 high), a very firm cap resistance, with 105.89 (May 2 high) just above. Once that level is broken, 106.52, the high of April and a double top, will be the last level standing before starting to talk about 107.00.

On the downside, the round level of 104.00 and the 200-day Simple Moving Average (SMA) at 103.86 should refrain from sending the DXY any lower. 

US Dollar Index: Daily Chart