- The DXY index hovers around the 91.00 region on Monday.
- US 10-year yields are approaching the 1.20% level.
- There are no scheduled data releases on the US economic calendar.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, remains near the 91.00 level at the beginning of the week.
The US Dollar DXY Index focuses attention on risk trends and returns
The DXY index alternates gains and losses around the 91.00 region on Monday, staying within a narrow range after Friday’s sharp pullback after hitting new yearly highs around 91.60.
The downward movement in the dollar occurs despite upward movement in US yields., with the 10-year benchmark gradually approaching the 1.20% level, area last visited in March 2020.
There is no data release scheduled on the US economic calendar on Monday, which should leave all attention on yield performance and broader risk appetite trends as immediate drivers of dollar price action.
What can we expect around the USD?
The dollar’s rise lost steam at the 91.60 area last week. Higher yields in the US remain the almost exclusive driver of sentiment around the dollar, helped by strong growth prospects and optimism over the launch of vaccines. However, it is expected that the continuation of the uptrend of the dollar will remain somewhat contained amid the fragile prospects for the currency in the medium / long term, and always in the context of the current massive fiscal and monetary stimulus in the economy of The US, the Federal Reserve’s “lower for longer” stance and the prospects for a strong recovery in the global economy.
Key events this week in the US: Inflation Figures Measured By CPI / Core CPI, President Powell’s Address On “The State Of The US Labor Market” on Wednesday and the preliminary indicator of consumer sentiment for the month of February on Friday.
Eminent Background Topics: 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.
Relevant levels of the US dollar DXY index
At the time of writing, the DXY index is gaining 0.07% on the day, trading at 91.11. A breakout of 91.60 (Feb 5 high) would open the door at 91.81 (100-day SMA) and at 92.46 (23.6% Fibonacci retracement of 2020-2021 dip). On the other hand, initial support is at 90.60 (55-day SMA), followed by 89.20 (January 6 low) and finally 88.94 (March 2018 low).
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