USD consolidates post-Davos as traders refocus on Fed policy outlook

The US dollar index stabilized near 106.80 as markets digested outcomes from the World Economic Forum in Davos and shifted attention back to Federal Reserve policy expectations. EUR/USD traded sideways around 1.0450, while AUD/USD held gains near 0.6380 after recent Australian data. NZD/USD remained pressured at 0.5720, reflecting diverging central bank outlooks. EUR/NOK showed increased volatility, testing the 11.85 resistance level amid oil price fluctuations. Market positioning suggests traders are reducing extreme dollar-long positions after the recent rally, creating potential for near-term consolidation. The absence of major policy surprises from Davos allowed fundamental drivers to reassert influence. Key support for the dollar index sits at 106.50, with resistance at 107.20. Upcoming US economic releases and Fed speaker comments will likely determine whether the dollar's uptrend resumes or enters a corrective phase.