USD looks set to rise to probe a major Fibo in January

Dec 27 (Reuters) - The U.S. dollar is in great shape as 2025 approaches and it will likely make further gains to test a major technical resistance level in January.

For the USD index, which tracks the dollar against a basket of six major currencies, 14-week momentum reading remains positive. There is scope for an eventual USD index probe of the major 108.962 Fibo, a 61.8% retrace of the 114.78 to 99.549 (2022 to 2023) drop. Once the 108.962 Fibo is taken out, that would unmask the 110.00 psychological level initially and could even overshoot to the 111.185 Fibo, a 76.4% retrace of the same 114.78 to 99.549 fall.

The dollar edged higher this week on expectations the currency would be boosted next year by policies by the incoming Donald Trump administration that are expected to boost growth and lift inflation. An analysis of the January performance since 2000 of the USD index, shows it has risen in 15 of the past 25 years.

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Weekly Chart: https://tmsnrt.rs/3Pc5Wov

Seasonality Chart: https://tmsnrt.rs/4iOME6q

(Martin Miller is a Reuters market analyst. The views expressed are his own)

((martin.miller@thomsonreuters.com))