The US Dollar Index regains its smile and is approaching 95.00

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  • The DXY reverses the previous slide to 2-month lows near 94.60.
  • US retail sales surprised to the downside in December.
  • US Consumer Sentiment comes next on the economic agenda.

Followed by the US Dollar Index (DXY), The USD shows a moderate recovery after bottoming out at multi-week lows near 94.60 at the end of the week.

US Dollar Index Trading Near Oversold Levels

After an initial drop to the 94.65 / 60 zone, the index regains some composure and looks to return to positive territory on Friday.

Helping with the dollar rebound, US yields also managed to reverse recent weakness and rose along the curve, with the 2-year yield approaching the 0.94% level, with the low flirting with the level. 1.75% and the long end in the 2.10% zone.

On the national calendar, December retail sales disappointed expectations after contracting 1.9% MoM and 2.3% MoM from the central reading. Additional results for the month of December saw a 0.1% monthly drop in Industrial Production, while Manufacturing Production contracted 0.3% month-on-month and Capacity Utilization dropped slightly to 76.5%.

Closing the economic agenda, the University of Michigan index should be supported by November’s commercial inventories.

Technical levels

Now the index is gaining 0.05% to 94.90 and a break above 95.71 (55-day SMA) would open the door to 96.46 (Jan 4, 2022 high) and finally 96.93 (Nov 24 high). 2021). On the other hand, the next barrier to the downside emerges at 94.62 (January 14, 2022 low) followed by 93.27 (October 28, 2021 monthly low) and then 93.12 (200-day SMA).

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