US dollar DXY index remains above 90.00 region

• The DXY index is advancing above the 90.00 level.
• US 10-year yields recede to the 1.60% region.
• The ADP report, Weekly Initial Unemployment Claims, and ISM Services PMI all 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, rises back above the 90.00 level during the European session on Thursday.

US dollar DXY index focuses attention on data

The DXY index advances above the key level of 90.00 during the second half of the week, due to the current rally in US yields and a general cautious tone among investors before the release of crucial US data.

In fact, key US 10-year benchmark yields are back in the 1.60% zone, picking up some of the ground lost after falling since the beginning of the month.

The best tone around the dollar also reflects the positive vision of the Beige Book of the Fed, published on Wednesday, which highlighted that the economy expanded at a moderate pace in the April-May period.

During the American session, market participants will focus on the publication of the ADP Report and Weekly Initial Unemployment Claims as a prelude to the NFP nonfarm payroll report for the month of May to be released on Friday. In addition, the ISM Services PMI, Challenger job vacancies data, Markit final composite and services PMI, and EIA report.

What can we expect around the USD?

The DXY index regains some composure and is back above the 90.00 level so far this week. Looking at the bigger picture, the negative stance on the dollar appears to prevail among market participants as speculation of higher inflation in the medium term now appears to have lost momentum and the narrative of superior US economic performance appears be almost discounted in the price. Driving bearish sentiment on the dollar is also further confirmation of the Fed’s mega-accommodative stance for the foreseeable future, based on recent FOMC minutes and Fed speeches.

Key events in the US this week: ADP Report, Initial Jobless Claims, ISM Non-Manufacturing PMI (Thursday) – NFP Non-Farm Payrolls, Factory Orders (Friday).

Eminent Background Issues: Biden’s bill to boost infrastructure worth nearly $ 6 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?

Relevant levels of the US dollar DXY index

At the time of writing, the DXY index is gaining 0.16%. At the time of writing, the DXY index is 90.05. A breakout of 90.44 (May 28 high) would open the door to 90.90 (May 13 high) and at 91.07 (100-day SMA). On the other hand, the next support is at 89.53 (May 25 low), followed by 89.20 (January 6 low) and 88.94 (March 2018 low).