- The DXY index alternates gains and losses just above the 91.00 level.
- US 10-year yields drop to the region of 1.53%.
- Today highlights the publication of initial jobless claims, housing data and the CB’s leading indicator index.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, alternate profit and loss just above the round 91.00 level at the start of the European session on Thursday.
US Dollar Index DXY focuses attention on data and the ECB
Following Tuesday’s slide to new lows in the 90.90 / 85 region, the DXY index managed to regain some mild bullish traction, although it lost strength in the 91.40 region on Wednesday.
What’s more, the decline in US yields dampens any bullish attempt on the dollar. In fact, 10-year key US benchmark returns extend the monthly downward movement and slip back to the 1.53% area so far, levels last visited in mid-March.
In the meantime, recent risk aversion sentiment, in response to increased volatility in mercaos and increased coronavirus cases in Asia, appears to be fading, with investors refocusing on risk appetite and weighing on the safe-haven US dollar.
Regarding US data, initial claims and weekly unemployment, the Chicago Fed National Activity Index, Existing Home Sales and the CB Leading Indicator Index will be released today.
Another notable event will be the ECB meeting, where the central bank is widely expected to make an optimistic assessment of the economy, although it maintains its ultra-accommodative stance unchanged.
What can we expect around the USD?
The DXY Index manages to regain some composure after bottoming below the 91.00 level earlier in the week, always amid a renewed softer tone around US yields and the loss of enthusiasm in US reflation trading. .UU. And the high rate of vaccination in the country. Also weighing on the dollar is the Fed’s mega-accommodative stance (until “further substantial progress” is made in inflation and employment) and hopes of a strong global economic recovery, all becoming a source of support for the economy. risk appetite and have the potential to reduce the dollar’s bullish momentum in the second half of the year.
Key events in the US this week: Initial Jobless Claims, CB Leading Index, Biden Virtual Climate Summit (Thursday) – Markit Preliminary PMI (Friday).
Eminent Background Issues: Biden’s bill to boost infrastructure worth about $ 3 trillion. 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?
Relevant levels of the US dollar DXY index
At the time of writing, the DXY index is gaining 0.02% on the day, trading at 91.12. A break above 91.64 (50-day SMA), would open the door to 92.11 (200-day SMA) and finally 93.43 (March 31 high). On the other hand, the next support is at 90.85 (April 20 low), ahead of 89.68 (February 25 low) and 89.20 (January 6 low).
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