US Dollar extends gains on robust US data

• DXY holds near 108.40 on Tuesday with gains.
• Fed's hawkish shift in December underpins higher yields.
• Markets digest strong JOLTS and ISM data.

The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, trades with gains on Tuesday after two days of losses. The Federal Reserve's (Fed) hawkish tilt supports elevated US bond yields, favoring the USD bulls. Strong labor market and Services PMI figures helped the USD trim losses ahead of December's Nonfarm Payrolls.

Daily digest market movers: US Dollar recovers after strong data

• US yields keep climbing, with the 10-year note near 4.64% and the 30-year at 4.87%, driven by heavy Treasury auctions this week.
• Fed Vice Chair for Supervision Michael Barr announced an early resignation effective February 28, potentially avoiding legal battles under the next administration.
• December ISM Services Purchasing Managers Index rose to 54.1 from 52.1, beating 53.3 forecasts. Prices Paid jumped to 64.4, stoking inflation concerns.
• Job Openings & Labor Turnover Survey (JOLTS) showed openings at 8.09 million in November, above both October's 7.83 million and the 7.7 million estimate.
• ADP private payrolls, Challenger job cuts, and weekly jobless claims will round out this week's labor market data before December Nonfarm Payrolls.
• Geopolitical tensions and potential trade war flare-ups keep safe-haven demand intact, limiting the US Dollar's downside despite profit-taking.

DXY technical outlook: Indicators stay firm above key support

The US Dollar Index maintains an overall bullish structure, with technical indicators retaining upward momentum. Despite intraday softness, the DXY has successfully defended its 20-day Simple Moving Average (SMA), reflecting solid underlying support.

While near-term overbought signals could prompt modest pullbacks, ongoing demand for US assets and higher yields may keep the index elevated, barring any major risk reversals.