- The DXY index gains more traction and rises above the 93.00 level on Tuesday.
- Higher US yields underpin the dollar’s rally.
- Housing data and consumer confidence stand out on today’s US economic calendar.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, moves higher on Tuesday and hits new yearly highs above the 93.00 region.
DXY US Dollar Index focuses attention on data and returns
The bullish momentum around the DXY index remains firm, bringing it to levels last seen in early November 2020 above the 93.00 region.
The upward movement is still supported by rising yields in US bond markets. In fact, yields on the key 10-year bond advance to new highs above 1.75%, an area last visited in January 2020.
The plan of Biden to Boost Infrastructure Joins Recently Passed $ 1.9 Trillion Fiscal Stimulus Bill, all transforming into new speculations of higher inflation in the coming months. This, plus the narrative of a superior performance of the US economy compared to the rest of the G-10 countries, further reinforces the current constructive stance on the US dollar.
Regarding US data, the FHFA House Price Index will be released today along with the S & P / Case-Shiller Index and the Conference Board Consumer Confidence Indicator for the month of March.
Additionally, R. Quarles of the FOMC, R. Bostic of the Atlanta Fed and J. Williams of the New York Fed are scheduled to have speeches throughout the session.
What can we expect around the USD?
The bullish momentum of the US dollar looks firm and solid, with the DXY index trading above the 93.00 level, at new yearly highs. Supporting this idea, the recent breakout of the 200-day SMA seems to reinforce the now constructive view on the dollar, at least in the short term. In addition, the recently approved fiscal stimulus package adds to the current superior performance of the US economy, as well as the 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 a ubiquitous source of support for the appetite for oil. risk, which could limit the dollar’s upward momentum.
Key events in the US this week: CB Consumer Confidence (Tuesday) – ADP Report, President Biden Speech (Wednesday) – Initial Jobless Claims, ISM Manufacturing PMI (Thursday) – NFP Non-Farm Payrolls (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? 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 93.04. A breakout of 93.07 (March 30 high) would expose 94.00 (round level) and 94.30 (November 4 high). On the other hand, the next support is at 92.52 (200-day SMA), followed by 91.30 (March 18 low) and then 91.16 (50-day SMA).
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
