- The DXY index continues to lose ground and revisits the 90.30 region.
- US 10-year benchmark yields revert to 1.30%.
- The release of preliminary US PMIs, housing data and several speeches from the Fed stand out on today’s economic calendar.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, remains under pressure and falls to fresh multi-day lows around 90.30 on Friday.
US Dollar Index focuses attention on data and returns
The DXY index loses ground for the second day in a row at the end of the week despite improvement in US yields. In fact, the DXY index now falls below the 55-day SMA around 90.40 and is targeting the 2020-2021 support line again, near the round 90.00 level.
The higher yields have not been transformed into a stronger US dollar in recent hours, allowing risk appetite sentiment will regain some ground lost latelyAlways in the usual context of reflation trade, vaccine optimism, and growing speculation that a new fiscal stimulus package could be approved soon.
Regarding US data, Markit to release preliminary indicators for manufacturing and services PMIs for the month of February, followed by existing home sales data and speeches by Richmond Fed Governor T. Barkin and Boston Fed Governor E. Rosengren.
What can we expect around the USD?
The DXY index’s corrective rally appears to have hit a decent hurdle near the 91.00 region, always following the renewed correlation with US yields. However, bullish attempts on the dollar should remain short-lived, amid the fragile overall outlook for the currency in the medium / long term. Meanwhile, the current massive fiscal and monetary stimulus in the US economy, the “lower for longer” stance of the Federal Reserve, and the prospects for a strong recovery in the global economy, are anticipated. expected to become an additional appetite for riskier assets.
Key events this week in the US: Preliminary PMIs for February on Friday.
Eminent Background Topics: 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 shedding 0.34% on the day, trading at 90.28. Immediate support is at 90.22 (Feb 16 low), followed by 90.04 (Jan 21 low) and 89.20 (Jan 6 low). On the other hand, a breakout of 91.05 (February 17 high) would open the door to 91.49 (100-day SMA) and finally 91.60 (February 5 high).
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