- The dollar extends Friday’s gains well above the 91.00 level.
- Yields on the US 10-year benchmark bond are rising above 1.60%.
- The Empire State Manufacturing Index stands out on today’s economic calendar.
The US dollar DXY index, which measures the strength of the dollar against a basket of the main currencies, opens the week with a positive tone and extends the rebound to below the 91.90 level.
US dollar DXY index rises on higher returns
The DXY index advance for the second day in a row Monday, although the key zone test at the 92.00 level remains elusive for the USD bulls.
The rebound in US yields, at levels last seen more than a year ago near the 1.65% level, sustains the continuation of the upward movement in the dollar, which continues to point to recent annual highs in the region of 92.50.
Meanwhile, the DXY index is still supported by the narrative about the superior performance of the US economy vis-Ã -vis other countries, in turn supported by the solid pace of the launch of the vaccine in the country.
With regard to the US data, today the publication of the New York Empire State manufacturing index stands out.
What can we expect around the USD?
The change in attitude around the dollar observed in recent weeks continues to be supported by the expected better performance of the US economy compared to the other G-10 countries. The new stimulus aid is also seen to add to this latest positive momentum with investors’ perception of higher inflation in the coming months and its translation into higher US yields. However, a sustainable upward move in the DXY index should be taken with a pinch of salt amid the Fed’s mega-accommodative stance (until “further substantial progress” in inflation and employment is achieved) and the hopes for a strong global economic recovery.
Key events this week in the US: Retail Sales / Industrial Production (Tuesday) – FOMC Meeting (Wednesday) – Initial Unemployment Claims / Philadelphia Fed Index (Thursday).
Eminent Background Issues: 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 0.14% on the day, trading at 91.81. A breakout of 92.50 (March 9 high), would expose 92.77 (200-day SMA) and finally 94.30 (November 4 high). On the other hand, the next support is at 91.36 (March 11 low), followed by 91.05 (February 17 high) and 90.70 (50-day SMA).
.
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.
