- The DXY index retreats some ground after hitting new yearly highs near 91.30.
- The dollar’s rise appears limited by the pessimism of the Fed and reflation trading.
- The ADP report, the ISM Services PMI and the EIA report 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, is subject to some selling pressure around the 91.00 level.
US dollar DXY index focuses attention on data
The DXY index extended its move above the 91.00 level on Tuesday, at the same time reaching new yearly highs around 91.30, although it lost some bullish momentum soon after.
The bullish momentum of the US dollar has occurred along with the rally in US 10-year bond yields to the zone above 1.11% after falling to the 1.06% zone on Monday. However, the additional gains in the dollar appear unsustainable on the short-term horizon due to reflation trading and the continuing pessimistic stance of the Federal Reserve.
Turning to US data, ADP’s private sector jobs report for the month of January will be released today, followed by ISM’s services PMI and the weekly report on US crude oil supplies. .UU. Of the EIA.
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 Tuesday 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 “lower for longer” stance of the Federal Reserve 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 0.15% on the day, trading at 91.06. Initial support is at 90.42 (21-day SMA), followed by 89.20 (January 6 low) and 88.94 (March 2018 low). On the upside, a breakout of 91.28 (Feb 2 high), would open the door to 91.87 (100-day SMA) and finally 92.46 (23.6% Fibonacci retracement of the 2020-2021 dip).
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