US Dollar lost ground after fresh data, yields continue their slide

• US Retail Sales from December underperformed, weekly Initial Jobless Claims rose.
• Traders monitor President-elect Trump's policies and potential tariff shifts, adding uncertainty to the global economic picture.
• Mixed data releases prompt investors to reassess near-term rate expectations, but the Greenback's longer-range trajectory remains constructive.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, extended its correction around the 109.00 level on Thursday. This week's subpar performance stems primarily from declining US Treasury yields, which undermined the Greenback's appeal mainly due to soft data from December.

Daily digest market movers: USD remains soft after mid-tier data

• December Retail Sales underperformed slightly, rising just 0.4% instead of the anticipated 0.6%. Meanwhile, November's result got revised from 0.7% to 0.8%.
• Weekly Initial Jobless Claims for mid-January came in at 217K, a marked increase relative to the prior revised 203K figure.
• Philadelphia Fed Manufacturing Survey surprised to the upside at 44.3, improving from the previous -16.4 (subsequently revised to -10.9), and well above the anticipated -5.0.
• NAHB Housing Market Index for January is projected at 45, slightly down from 46, signaling modest headwinds in the housing sector.
• Equity markets slipped on Thursday as traders locked in profits related to softer inflation plays from Wednesday.
• Fed expectations remain anchored by CME FedWatch Tool data, indicating a 97.3% likelihood of unchanged policy at this month's meeting.
• Benchmark yields dipped with the 10-year Treasury note retreating to around 4.65%, down from its 4.80% peak on Tuesday.

DXY technical outlook: Brief respite but overall picture still leans bullish

The US Dollar Index remains under pressure below 109.00 after this week's yield-driven retreat. Profit-taking has contributed to recent losses, but the longer-term outlook stays favorable as the DXY hovers near multi-year peaks.

Significantly, the 20-day Simple Moving Average (SMA) rejected deeper selling and stands as a robust support line for bullish traders. While near-term pullbacks are possible, especially if more US data surprises to the downside, the Greenback's overarching uptrend could quickly reassert itself as markets weigh persistent inflation and the Fed's gradual policy approach.