- The DXY index remains unchanged upside bias above the 90.00 level.
- The general CPI for December in the United States rose 0.4% month-on-month, the core CPI 0.1% month-on-month.
- Later the Fed Beige Book will be published. Attention will also turn to various Fed speeches.
He US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, keeps the upside bias unchanged above the 90.20 level at the start of the American session on Wednesday.
DXY US Dollar Index Focuses Attention on Fed Speeches
The DXY index maintains the bullish momentum, managing to stay above the 90.00 level and extending the rise towards the 90.30 region on Wednesday, after recovering from an episode of selling pressure earlier in the day.
Meanwhile, US 10-year benchmark yields decline somewhat from recent highs and are trading around the 1.12% area after the release of US inflation figures.
Consumer prices General CPI increased 0.4% month-on-month in Decemberwhile prices that exclude food and energy costs, the core CPI, rose to a weak 0.1% from the previous month. Later, the EIA will publish its weekly report on crude oil inventories before the publication of the Fed’s Beige Book.
Additionally, St. Louis Fed Governor J. Bullard, FOMC L. Brainard, Philadelphia Fed Governor P. Harker, and FOMC R. Clarida have speeches scheduled during the session.
What can we expect around the USD?
The DXY index has recovered buying interest after bottoming out in the 89.20 region in the first week of trading of the new year and has managed to advance to near the 90.70 level so far this week, where relevant resistance has emerged. . The recovery in US yields continues to support the dollar, as investors continue to perceive a possible pick-up in inflationary pressure / expectations in response to the more likely increase in fiscal stimulus under a Democratic White House. However, the outlook for the dollar remains fragile in the short / medium term for the time being amid massive fiscal and monetary stimulus in the US economy, the “lower for longer” stance from the Federal Reserve 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 0.19% on the day, trading at 90.26. A breakout of 90.72 (high of January 11), would open the door to 91.01 (high of December 21, 2020) and finally to 91.23 (high of December 7, 2020). On the other hand, immediate support is at 89.20 (January 6 low), followed by 88.94 (March 2018 low) and 88.25 (February 2018 low).