- The DXY index remains bearish tone unchanged below 91.00.
- The dollar’s downward movement comes despite the rebound in US yields.
- The weekly API report will be the only featured post for the day.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, remains on the defensive for another day and extends decline below key support at 91.00 level.
US dollar DXY index weakens on risk appetite
The DXY index extends the move down to new 7 week lows in the region of 90.90 / 85 on Tuesday.
The dollar still can’t muster any strength despite the rebound in US 10-year bond yields, which rises to the 1.63% region after bottoming out around 1.55% at the beginning of the week.
In the meantime, investors continue to favor risk appetite in the markets, always with the expectations of a strong upturn in the Old Continent together with the firmer pace of the vaccination campaign, what weighs on the safe haven USD.
When it comes to US data, the API’s weekly crude oil supply report will be the only release later on Tuesday.
What can we expect around the USD?
The DXY index remains weak and retreats below the 91.00 level for the first time since early March, always amid the decline in US yields and the loss of enthusiasm in US reflation trading and the high pace vaccination in the 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: Initial Jobless Claims, CB Leading Index, Biden Virtual Climate Summit (Thursday) – Markit Preliminary PMI (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 0.13% on the day, trading at 90.96. Next support is at 90.85 (April 20 low), ahead of 89.68 (February 25 low) and 89.20 (January 6 low). On the other hand, a break above 91.60 (50-day SMA), would open the door to 92.16 (200-day SMA) and finally 93.43 (March 31 high).
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