- The DXY index extends Thursday’s gains and climbs back to the 91.80 area.
- Higher US yields lend support to the dollar on Friday.
- US consumer sentiment and housing data 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, manages to recover some buying interest and moves through the area of 91.80 at the end of the week.
DXY US Dollar Index focuses attention on returns and data
The DXY Index extends Thursday’s gains and moves higher to retest the 91.80 / 85 region after recovering from recent multi-week lows around the 91.50 region.
The renewed strength of the dollar occurs amid the recovery of US 10-year bond yields, which fell to levels last seen in early March around 1.52% on Thursday and is now moving close to the 1.58% level.
In the meantime, the dollar struggles to find bullish traction so far this month despite strong national economic data (weekly jobless claims, regional manufacturing indicators and retail sales), as investors appear to have already priced in the outperformance of the US economy compared to the rest of the G-10 countries amid the improvement in the rate of vaccination abroad.
Turning to US data, the preliminary consumer sentiment index for the month of April will be released today, along with figures for home starts and building permits posted for the past month.
What can we expect around the USD?
The DXY index appears to have found decent support around the 91.50 zone so far, amid the decline in US yields and the loss of enthusiasm in US reflation trading and the high rate of vaccination in the US. 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: Housing starts, building permits, preliminary consumer sentiment (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 0.07% on the day, trading at 91.73. A break above 92.21 (200-day SMA), would open the door to 93.43 (March 31 high) and finally 94.30 (November 4 high). On the downside, the next support is at 91.49 (April 15 low), followed by 91.30 (March 18 low) and 91.04 (100-day SMA).
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