- The DXY records new 2021 highs around 92.60 on Wednesday.
- Durable goods orders from the US contracted 1.1% month-on-month in February.
- Chief Powell will testify before the United States Senate later in the session.
The dollar, when measured by the US dollar index (DXY), remains well offered near recent highs in the 92.50 / 60 area.
The US dollar index rises on the recovery of yields
The supply bias around the dollar holds up well so far this week pushing the index to the area last seen in November 2020 around 92.60.
The dollar’s bullish move comes amid the usual narrative around the US economic recovery and the rally in US 10-year yields, which manage to regain the 1.65% area after falling. below 1.60% at the beginning of the session.
In the US data space, major durable goods orders contracted 1.1% month-on-month in February, while basic orders fell 0.9% month-on-month. Also, the flash manufacturing PMI is expected to be 59.0 for the current month, slightly below estimates (59.3).
What to look for around USD
The dollar manages well to extend the breakout of 92.00 further and makes new highs around 92.60, which is the area that coincides with the critical 200-day SMA. The recently approved fiscal stimulus package adds to the ongoing outperformance of the US economic narrative, as well as investors’ perception of higher inflation in the coming months, all transforming into extra oxygen for the dollar. However, the Fed’s mega-accommodative stance (until “further substantial progress” is made in inflation and employment) and hopes for a strong global economic recovery remain an ever-present source of support for the risk complex. and they have the potential to contain the rise of the dollar.
Relevant levels
At the moment, the index is gaining 0.18% to 92.50 and a breakout of 92.60 (2021 high on March 24) would expose 92.61 (200-day SMA) and finally 94.30 (November 4 monthly high). On the other hand, the next support is located at 91.30 (weekly low on March 18), followed by 91.05 (high on February 17) and then 90.98 (50-day SMA).
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