US dollar DXY index rises to new highs near 93.20

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  • The DXY index extends the rally above the 93.00 level.
  • US 10-year yields rebound above 1.20%.
  • MBA Mortgage Applications and EIA Weekly Report feature prominently on today’s economic calendar.

The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, remains firm and climbs to new 3-month highs near 93.20 on Wednesday.

US dollar DXY index supported by risk aversion

The DXY index extends the current advance and posts earnings for the fifth day in a row Wednesday, always after persistent risk aversion and amid a slight rebound in US yields.

In fact, concerns about coronavirus, derived exclusively from the spread of the Delta variant, continue to pose a threat to global growth prospects and benefit traditional safe haven assets, like the US dollar.

Additionally, US 10-year bond yields appear to have reached some support at levels below 1.15% on Tuesday and are now recovering above 1.20%, while lending some strength to the dollar.

Regarding the US data, today the publication of the MBA’s weekly mortgage applications stands out, followed by the EIA report on US crude supplies during the past week.

What can we expect around the USD?

The recovery in the DXY index has already passed the key barrier of 93.00 and is targeting the 2021 highs in the 93.50 area. The positive movement in the DXY index is mainly sustained by the resumption of risk aversion following the resurgence of coronavirus concerns. The positive stance in the dollar, meanwhile, continues to be supported by the strong pace of the economic recovery, higher-than-expected inflation figures and growing rumors of rate hikes / QE cuts ahead of schedule.

Key events in the US this week: MBA Mortgage Applications (Wednesday) – Initial Jobless Applications, Existing Home Sales (Thursday) – Preliminary Manufacturing and Services PMI for July (Friday).

Eminent Background Topics: Biden’s multi-million dollar plan to support infrastructure and families. 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 0.21% on the day, trading at 93.16. A breakout of 93.43 (March 21 high) would open the door to 94.00 (round level) and 94.30 (November 4 high). On the other hand, the next support is at 92.46 (23.6% Fibonacci retracement of the November-January movement), followed by 92.00 (July 6 low) and 91.51 (June 23 low).

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