The U.S. dollar index (DXY) inched up 0.57% to close at 99.62 on Friday, after European Central Bank (ECB) President Mario Draghi gave a speech at the European Banking Congress in Frankfurt, underlining the ECB’s concerns about eurozone inflation and hinted at more quantitative easing. The market is pricing in various measures from the ECB, to be announced at its Governing Council meeting on December 3, including an expansion of the 1.1 trillion euro bond-buying program or measures such as taking the deposit rate further below zero. The EUR/USD currency pair tanked 0.82% on Friday, to close at 1.0647 dollars per euro, near the 6-month low.

The U.S. dollar has been gaining momentum since earlier in the week, after the Cabinet Office of Japan said on Monday that the gross domestic product (GDP) shrank at an annualized pace of 0.8% in the July-September period from the previous quarter, following a revised 0.7% contraction in the second quarter, missing the economists’ forecast of a 0.2% decline. After two consecutive quarterly contractions, Japan is now technically considered to be in recession, the second recession in two years. 

The U.S. Labor Department said on Tuesday that its Consumer Price Index (CPI) increased 0.2% month-over-month in October on a seasonally adjusted basis, in line with economists’ forecast polled by Reuters. The September CPI was revised to a 0.2% decline. In the 12 months through October, the CPI inched up 0.2% after being unchanged in September, compared to the estimate of a 0.1% gain from a year ago. The U.S. Federal Reserve usually prefers the Commerce Department’s personal consumption expenditures, or PCE, figures for a rate hike decision.

Separately, the Fed said on Tuesday that U.S. industrial production fell 0.2% for the second straight month in October, missing the economists’ forecast of a 0.1% gain, according to Reuters. A strong dollar is restraining U.S. inflation and has reduced overseas demand for U.S. manufactured products. 

The DXY has been on the rise since mid-October and surged to an intraday high of 99.96 on Wednesday, after the release of the U.S. Federal Reserve’s minutes of the October 27-28 FOMC meeting which said, “Most participants anticipated that, based on their assessment of the current economic situation and their outlook for economic activity, the labor market, and inflation, these conditions could well be met by the time of the next meeting,”.

According to Marc Chandler, former Head of Global Markets Strategy at Brown Brothers Harriman, as of November 5, S&P 500 companies that earn over half of their income in the U.S. reported a 4.8% rise in earnings. Those that generate more than half their sales abroad reported a loss of 10.6%. Overall sales for the S&P 500 companies fell 3.7% in the third-quarter, with sales of domestic-oriented companies rising 1% while the more international companies reported a 12.5% decline in sales.

Of the 481 S&P 500 companies that have reported earnings so far, to November 20 for the third-quarter 2015, the blended earnings have declined by 1.6%, according to FactSet. If this is the final blended earnings decline number for the quarter, it will mark the first time since the second-quarter and third-quarter of 2009 that the index has seen two consecutive quarters of year-over-year declines in earnings. 

For the current year 2015, analysts at FactSet estimate that the S&P 500 would post a 3.0% decline in earnings and a 3.4% decline in revenue. This would be the first time for the index to report a year-over-year decline in earnings and revenue on an annual basis since the global financial crisis in 2009.

Technically, in a short-term viewpoint, the DXY has been trading in a symmetrical triangle chart pattern since the beginning of 2015. The index is about to break out the symmetrical triangle pattern at about the 100 level, as the divergence between the Fed and ECB widens. In a long-term viewpoint, the DXY has been moving in a bearish ascending broadening (ASC/B) wedge chart pattern with the top of the trading range at 102.16, or the 61.8% Fibonacci retracement level. 

A failure to break out of the ascending broadening wedge pattern could result in a sharp pull back of the index. Nonetheless, the DXY at above the 100 level is not sustainable for the long-term, as a strong dollar is a major headwind for U.S. companies to expand abroad.