- The DXY index hits new yearly highs in the region of 92.70.
- Risk appetite remains under heavy pressure Thursday.
- Final fourth-quarter GDP and weekly jobless claims stand out on the US economic calendar.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, remains in the area of yearly highs around the 92.70 level Thursday.
DXY US Dollar Index focuses attention on data
The DXY index advances for the third day in a row and manages to register new highs of 2021 in the region of 92.70, always in the context of the persistent buying interest around the US dollar.
In fact, while expectations of another pandemic wave in the Eurozone have damaged sentiment around the euro, the prospects of a stronger dollar still underpinned by the superior performance of the US economy versus the other G-10 countries and the solid pace of the vaccine launch.
Against this, benchmark 10-year US bond yields continue to move in a consolidation range above the 1.60% level for the time being.
Turning to US data, final fourth quarter GDP figures and initial weekly jobless claims will be released today.
What can we expect around the USD?
The US Dollar DXY Index is extending the breakout of the 92.00 level to the upside and reaching new highs around the 92.70 region, breaking above the 200-day SMA. The recently approved fiscal stimulus package adds to the current superior performance of the US economy, as well as investors’ perception of higher inflation in the coming months, all transforming into additional strength for the dollar. However, the Fed’s mega-accommodative stance (until “further substantial progress” in inflation and employment is made) and hopes for a strong global economic recovery remain an ever-present source of support for the appetite for oil. risk, which could limit the dollar’s upward momentum.
Key events in the US this week: Final Fourth Quarter GDP Initial Unemployment Claims (Thursday) – February PCE, Personal Income / Spending, University of Michigan Final Consumer Sentiment Index (Friday).
Eminent Background Issues: Trade conflict between the United States and China under the Biden administration. Reduction of speculation in the face of economic recovery. Real US interest rates versus Europe. Could US fiscal stimulus cause overheating? Future of the Republican Party after Trump’s acquittal.
Relevant levels of the US dollar DXY index
At the time of writing, the DXY index is gaining 0.10% on the day, trading at 92.62. A breakout of 92.69 (March 25 high) would expose 93.00 (round level) and 94.30 (November 4 high). On the other hand, the next support is at 91.30 (March 18 low), followed by 91.05 (February 17 high) and then 91.02 (50-day SMA).
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