US Dollar DXY Index Loses Momentum Near 93.50, Focus Is on Biden and Data

  • The DXY index moves to new 2021 highs near 93.50, then pulls back.
  • President Biden will speak later today about the additional stimulus.
  • The ADP report takes center stage on the American economic calendar.

The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, alternates gains with losses after posting new 2021 highs in the region of 93.40 / 45 at the beginning of the session on Wednesday.

DDXY US Dollar Index focuses attention on returns, Biden and data

The DXY index seems to have found decent resistance near the 93.50 level on Wednesday, coinciding with mild overbought conditions according to the daily RSI.

The reaction to the current downturn in the DXY index comes accompanied by a corrective drop in yields on the benchmark 10-year bond the US from recent multi-month highs around 1.77% amid month-end / quarter money flows.

Later in the day, investors will follow closely President Biden’s speech in Pittsburgh, where he is expected to unveil additional stimulus plans involving infrastructure, manufacturing and healthcare. This planned package would be worth around $ 3 trillion.

When it comes to data, ADP’s private sector employment report for the month of March will be the center of attention, followed by weekly mortgage applications, Chicago PMI, pending home sales and weekly report EIA’s usual US crude oil supply.

What can we expect around the USD?

The bullish momentum of the US dollar looks firm and solid, with the DXY index consolidating the recent break above the 93.00 level, to new yearly highs. Supporting this idea, the recent breakout of the 200-day SMA seems to reinforce the now constructive view on the dollar, at least in the short term. In addition, the recently approved fiscal stimulus package adds to the current superior performance of the US economy, as well as the investors’ perception of higher inflation in the coming months, all transforming into additional strength for the dollar. However, the Fed’s mega-accommodative stance (until “further substantial progress” in inflation and employment is made) and hopes for a strong global economic recovery remain an ever-present source of support for the appetite for oil. risk, which could limit the dollar’s upward momentum.

Key events in the US this week: ADP Report, President Biden’s Address (Wednesday) – Initial Jobless Claims, ISM Manufacturing PMI (Thursday) – NFP Non-Farm Payrolls (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 down 0.10% on the day, trading at 93.20. The next support is at 92.50 (200-day SMA), followed by 91.30 (March 18 low) and 91.22 (50-day SMA). On the upside, a break above 933 (March 31 high) would expose 940 (round level) and finally 940 (November 4 high).

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