- The DXY index recovers from Wednesday’s slide and returns to 91.30.
- Positive growth prospects and vaccine launches support the dollar.
- The release of initial jobless claims and factory orders data stand out on the US economic calendar.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, rises again in the region of yearly highs around 91.30.
US Dollar DXY Index Stands Strong, Focusing on Data and Returns
The softer tone in risk appetite, coupled with higher US returns, give strength to the dollar and propel the DXY index to new yearly highs in the 91.30 / 40 region in the second half of the week.
Recent better than expected results in US data, together with the launch of the coronavirus vaccine, continue to favor the best growth prospects compared to foreign economies and maintain the upward movement in US yields, all transforming into additional support for the dollar.
Regarding the US data, the initial weekly unemployment claims at the beginning of the American session will be released today, followed by the factory orders data for the month of December and the governor’s speech from the San Francisco Fed, M. Daly.
What can we expect around the USD?
The dollar rally remains strong and has pushed the DXY index to new yearly highs in the 91.30 / 40 region on Thursday, always supported by weaker sentiment in risk appetite and higher yields in the US bond market. However, occasional bullish attempts in the dollar are expected to remain limited amid the fragile outlook for the dollar in the medium / long term, and always in the context of the current massive fiscal and monetary stimulus in the US economy. .UU., The Federal Reserve’s “lower for longer” stance and the prospects for a strong recovery in the global economy.
Relevant levels of the US dollar DXY index
At the time of writing, the DXY index is gaining 0.13% on the day, trading at 91.29. A clear break above 91.32 (Feb 4 high), would open the door to 91.86 (100-day SMA) and 92.46 (23.6% Fibonacci retracement of 2020-2021 dip). On the other hand, initial support is at 90.51 (21-day SMA), followed by 89.20 (January 6 low) and finally 88.94 (March 2018 low).
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