- The DXY Index loses traction after hitting new 2021 highs.
- The appetite for risk returns to the markets on Tuesday.
- Tuesday’s economic calendar brings the release of the IBD / TIPP index, various speeches from Fed members, and API data.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, loses some bullish momentum and pulls back below the 91.00 level on Tuesday.
US Dollar Index DXY focuses attention on risk and policy trends
The DXY index moves on the defensive after two consecutive daily uploads and falls back below the 91.00 level after hitting new yearly highs near 91.10 at the beginning of the week.
The strong advance of the dollar earlier in the week found additional oxygen in the moderate downward correction of the EUR / USD, fueled in turn by speculation that the economic recovery could be losing momentum in the Old Continent.
Regarding US data, the IBD / TIPP index and the weekly API report on US crude oil reserves will be released today. Additionally, Cleveland Fed Governor L. Mester and New York Fed Governor J. Williams have speeches scheduled.
What can we expect around the USD?
The DXY index regained traction to the upside and hit fresh yearly highs just above the 91.00 level on Monday, amid weaker sentiment in risk appetite. However, occasional bullish attempts in the dollar are expected to remain limited amid the fragile outlook for the dollar in the medium / long term, and always in the context of the current massive fiscal and monetary stimulus in the US economy. ., the Federal Reserve’s “lower for longer” stance and the prospects for a strong recovery in the global economy.
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 90.86. Initial support is at 90.33 (21-day SMA), followed by 89.20 (January 6 low) and 88.94 (March 2018 low). On the upside, a breakout of 91.06 (Feb 1 high) would open the door to 91.89 (100-day SMA) and finally 92.46 (23.6% Fibonacci retracement of 2020-2021 dip).
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