US Dollar retraces from two-year high after PMI data, geopolitical uncertainty prevails

US Dollar Index declines below 108.00 on Friday, November 22.

DXY retreats from 2-year high despite strong S&P PMI data; profit-taking and China's stimulus package contribute to pullback.

Fed officials remain cautious with Barkin citing inflation risks and Williams indicating potential rate reduction.

In Friday's session, the US Dollar Index (DXY) declined slightly after reaching a new two-year high amidst geopolitical instability. However, strong S&P PMI data reinforced the US economy's relative resilience, supporting the DXY's gains. 

The US Dollar's pullback was attributed to profit-taking and positive economic indicators from China, including a rate reduction and a comprehensive stimulus package. Consequently, the DXY retraced from above 108.00, stabilizing around 107.50.

The DXY, which values the Greenback against a basket of major currencies, maintains a bullish bias, driven by solid economic data and a less dovish Federal Reserve (Fed) stance. Despite the retreat, the uptrend remains intact, with investors now expecting a gradual pace of rate cuts. Technical indicators suggest potential consolidation, but the overall bullish momentum remains strong.