DXY US Dollar Index Looks Firm Above 92.00 Level

• The DXY index extends the rally to new 2021 highs near 92.20.
• Investors’ attention remains on yields, inflation and the launch of vaccines.
• Wholesale inventories will be the only publication on the US economic calendar.

The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, extends the upward movement to new annual highs in the region of 92.15 / 20 at the beginning of the week.

DXY US Dollar Index focuses attention on stimulus, inflation and returns

The DXY index advance for the fourth day in a row so far on Monday, as sentiment around the dollar continues to improve among investors and yields continue to rise.

In fact, Friday’s NFP Nonfarm Payrolls Above Expectations added to the narrative of an outperformance of the US economy vis-à-vis the rest of the G-10 countries, while bolstering the dollar’s momentum in conjunction with the robust pace of the US vaccine launch. and the prospects for higher inflation in the coming months.

On the political front, the Senate of The United States Passes Biden’s $ 1.9 Trillion Stimulus Bill even though Republicans remain skeptical of its need and size. The stimulus package is expected to be signed by President Biden before March 14.

Regarding the data for the United States, the wholesale inventories for January will be released during the American session today.

What can we expect around the USD?

Sentiment around the dollar holds firm and eventually pushes the DXY index to fresh yearly highs above the 92.00 level. The recent change in attitude in the dollar came along with the strong rebound in US yields to levels recorded more than a year ago, all in the context of the growing perception of investors of higher inflation in the coming months. However, a sustainable upward move in the DXY index should be taken with a pinch of salt amid the Fed’s mega-accommodative stance (until “substantial progress” is seen), additional fiscal stimulus, and hopes for a strong economic recovery abroad.

Key events this week in the US: Inflation figures measured by the CPI (Wednesday), initial jobless claims (Thursday), consumer sentiment for February (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 0.23% on the day, trading at 92.19. A breakout of 92.46 (23.6% Fibonacci retracement of the 2020-2021 dip), would expose 92.91 (200-day SMA) and finally 94.30 (Nov. 4 high). On the other hand, the next support is at 91.21 (100-day SMA), followed by 91.05 (February 17 high) and 90.51 (50-day SMA).