• US Dollar is meeting a key support area for the open. 
• Bulls are lurking on the backside of the hourly trendline. 

The US Dollar DXY index broke out of the week's channel between 111.25 and 109.40 in the final two days of the week on the back of the US Consumer Price Index. DXY dropped to a fresh low of 106.28 on Friday, extending the post-CPI dump into a fresh layer of potential support. 

O(n Friday, the US Treasury market was closed for the Veterans Day Holiday, but investors cheered a slight softening of China’s COVID restrictions which helped risk assets to run higher, weighing on the greenback as investors favored riskier currencies. DXY was down about 3.8% over two sessions, on pace for its largest two-day percentage loss since March 2009.

For the week ahead, Federal Reserve speakers are likely to push back on the overly dovish market reaction after the October CPI report. This could see the greenback correct as the following analysis will illustrate. ''Officials will make clear that following the positive news on the inflation front, there must be further evidence of sustained monthly core inflation that is more in line with their 2% target,'' analysts at TD Securities argued. ''And given the persistent strength of the labor market, this may take a while.''

US Dollar technical analysis

The bears are now meeting support at the lower quarter of the 106 area which could serve as a foundation for a significant correction.  A break of 108.00 opens the risk of a prolonged reversion up the Fibonacci scale towards 109.50. 

Meanwhile, eyes will be on the lower time frames for confirmation of a deceleration of the downside:

The index remains on the front side of the micro trendline on the hourly trend, so until it breaks through, the downside remains intact.