- The DXY Index loses traction and falls to lows below 91.20.
- US 10-year yields appear stable in the 1.55% region.
- Risk appetite picks up on Monday.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, starts the week on the defensive and falls to multi-week lows below the 91.20 level.
Weaker DXY US Dollar Index with Stable Returns and Activated Risk Appetite
The DXY index extends Friday’s losses and hits fresh multi-week lows below 91.20 level due to consolidation sentiment in US yields and further improvement in risk appetite.
In fact, US 10-year benchmark yields appear to be stabilized at lower end of recent range around 1.55%.
In the absence of data releases on the US economic calendar at the beginning of the week, investors continue to be guided by US yields and developments in risk appetite to determine price action around the US dollar.
Although the latest results in the US macroeconomic data confirmed the solid rebound in economic activity, market participants continue to watch the progress of the launch of the vaccine and the now better growth prospects in the Old Continent.
What can we expect around the USD?
The DXY index looks weaker to new lows around 91.20, always amid the decline in US yields and the loss of enthusiasm in US reflation trading 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? 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 0.51% on the day, trading at 91.15. The next support is at 91.14 (daily low), ahead of 91.03 (100-day SMA) and 89.68 (February 25 low). On the other hand, a break above 92.18 (200-day SMA), would open the door to 93.43 (March 31 high) and finally 94.30 (November 4 high).
.
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.
