The US Dollar Index (DXY) is making attempts to extend its gains for the second consecutive day, trading slightly higher around 102.40 in the European session on Thursday. The rise in US Treasury yields appears to be a catalyst for the strength in the US Dollar (USD), with the 2-year and 10-year yields on US bond coupons standing higher at 4.37% and 3.86%, respectively, as of the latest update.

Despite this, the Greenback is facing downward pressure due to the market’s perception of the Federal Reserve’s (Fed) dovish outlook on the interest rate trajectory in the first quarter of 2024. While some Fed members have dismissed premature speculations of imminent interest rate cuts, with New York Fed President John Williams outright opposing the idea and San Francisco Fed President Mary Daly considering predictions premature, there is a cautionary sentiment expressed by Austan Goolsbee, Chicago Fed President. Goolsbee suggests that the market’s optimism for rate cuts might be surpassing realistic expectations.

Positive economic indicators, such as a resurgence in existing home sales and a significant boost in consumer confidence, are supporting the US Dollar. November’s US Existing Home Sales Change exhibited a notable monthly increase of 0.8%, recovering substantially from the previous month’s decline of 4.1%. The CB Consumer Confidence also experienced remarkable growth, showing its most significant increase since early 2021, rising from 101.0 to 110.07.

As the North American session unfolds, investors are closely monitoring key economic releases to gain deeper insights into the state of the US economy. Notable indicators include US Gross Domestic Product Annualized (Q3), Initial Jobless Claims, and the Philadelphia Fed Manufacturing Survey.