USD: Bull Signals vs Bearish Macro - DXY Tests Key Resistance

The US Dollar Index (DXY) faces a critical juncture as bullish technical patterns clash with deteriorating macroeconomic fundamentals. Price action shows the DXY testing the 106.50 resistance level, up 0.4% on the day, driven by short-covering and year-end positioning. However, underlying macro data paints a grimmer picture with US Manufacturing PMI remaining in contraction territory at 49.0 and consumer confidence sliding to six-month lows. Technical indicators suggest immediate resistance at 106.80, coinciding with the 50-day moving average, while support holds at 105.20. EUR/USD has retreated to 1.0480 (-0.35%) as dollar strength persists, while USD/CHF advances to 0.8850 (+0.28%). The divergence between price action and fundamentals creates uncertainty for traders, with many awaiting this week's ISM Services data and Friday's Non-Farm Payrolls for clearer directional cues.