After closing last week with a slight decline and remaining in a downward trend since October, the dollar index (DXY) futures opened today's trading day with a gap down 26 points.

Judging by the DXY daily chart, the price is seeking the nearest support level, passing through the 101.00 mark (the lower line of the descending channel), and in case of further decline, this target will be reached soon. Next is the psychologically significant level of 100.00.

In the meantime, investors are cautious with today's eventless economic calendar; trading volumes also remain low. Market participants are also following the events in the U.S., where the question of raising the national debt limit is being discussed (last Friday, the index exceeded the previous limit of $31.4 trillion). It is likely that the lower house of Congress will oppose a bill to raise the limit, but as has happened before, the limit may be raised again. Market participants will calm down, the dollar will benefit from this decision, and its buyers will get a break. But for now the dollar remains under pressure, especially against its main competitor on the currency market—the euro.

During today's Asian trading session the EUR/USD pair continued to rise, reaching a new local and 9-month high at 1.0926. As of writing, the pair fell to 1.0892, but its bullish trend is still in force, while market participants expect that the European Central Bank will continue its policy of tightening its monetary policy. At the same time, the ECB has much more room for maneuver than the Fed. Also noteworthy is the considerable differential in interest rate levels in the U.S. and the eurozone, 4.50% and 2.50%, respectively.

At its December meeting, the ECB's base interest rate on loans was raised to 2.5% and on deposits to 2%. According to economists' December estimates, inflation in the eurozone will be 6.3% in 2023 and 3.4% in 2024.

"The Governing Council judges that interest rates will still have to rise significantly... to ensure a timely return of inflation to the 2% medium-term target," the ECB said in a statement following the meeting.

In her speech at the World Economic Forum in Davos last week, ECB President Christine Lagarde said, "inflation expectations are not easing" and "the ECB will continue to raise rates." In her opinion, "inflation is too high," and "the ECB intends to bring it down to 2% in a timely manner."

The ECB believes that GDP growth may decline, including due to the energy crisis in the EU, high uncertainty, weakening global economic activity and tightening financing conditions. However, the recession should not drag on too long, although strong growth is also not to be expected.

"In the near future, growth will recover as the current headwinds ease. Overall, the Eurosystem staff projections now see the economy growing by 3.4% in 2022, 0.5% in 2023, 1.9% in 2024 and 1.8% in 2025." the ECB added in a statement following the December meeting.

Today at 17:45 (GMT), Lagarde will give a speech again, and if she touches on monetary policy issues, her tone of statements is likely to remain hawkish, which could further support the euro and the EUR/USD pair.

And on Tuesday, a whole block of important macro statistics will be released for Germany, France and the eurozone as a whole, including PMIs in the manufacturing and services sectors for January. The indicators are mostly expected to rise. However, this will most likely not give the euro a strong bullish momentum, although it will support the euro in the short term: the indicators remain below the value of 50, which separates the growth of business activity from its slowdown.

In general, and above the key support levels 1.0570, 1.0475, the upward dynamics of EUR/USD remains, making long positions preferable.