A further correction in the USD’s hefty Q4 sell-off has been looking a strong likelihood; price action around the late year rebound in the USD generally suggested a major low/reversal on the charts; seasonal trends are USD positive in Q1 – and especially so in January – while markets may have gotten over their skis a little on Fed pricing, although swaps are showing little change this morning, with 18-19 bps of cuts priced in for the March FOMC still. 

Technically, corrective gains in the DXY are poised to extend towards 104 (103.87 is the 50% Fibonacci retracement of the Q4 decline in the index) and might reach 104.63 (61.8% retracement resistance).

Support for the index sits around the 103 area now.