US Dollar weakens after disappointing ISM and S&P Services data

• US Dollar Index declines toward 106.10 on Wednesday.
• Soft services data seems to be pushing the USD lower.
• Market attention will turn to Fed Chair Powell's words late in the American session.

The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, declined toward 106.10 on Wednesday amidst slight profit-taking after steep rallies against many major G20 currencies this week.  

Profit taking and soft ISM PMIs seem to be the reasons for the USD weakness. However, the Buck might get bailed out by Federal Reserve (Fed) Chair Jerome Powell's words later in the American session.

Daily digest market movers: US Dollar declines against major rivals after soft ISM Services figures

• The ISM Services PMI fell to 52.1 in November, a decline of 3.9 points compared to the previous month.
• The PMI reading missed market expectations of 55.5 and marked a significant drop from October's level of 56.
• The decline in the Services PMI suggests a slowdown in the growth of the US services sector.
• Later in the session, the Fed Beige Book report is expected to reflect a similar economic outlook to the previous report, which showed 'moderate growth' in the US economy.

DXY technical outlook: DXY tests the 20-day SMA,  break below could worsen short-term outlook

The US Dollar Index is facing a potential turning point as it approaches the 20-day Simple Moving Average (SMA). A break below this key level could worsen the short-term outlook for the index, as it has recently lost some momentum. 

Technical indicators are sending mixed signals, with the Relative Strength Index (RSI) remaining in bullish territory but the Moving Average Convergence Divergence (MACD) showing red bars. Resistance levels at 107.00 and 108.00 may pose challenges, while support is expected at 106.00-106.50. Overall, while the DXY is facing some headwinds, the bullish trend remains strong.