- The DXY index extends the recovery and rises to the 90.80 / 90 region.
- Risk aversion sentiment holds for now.
- Q4 advanced GDP and initial US jobless claims stand out on the US economic calendar.
He US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, extends recent gains and is approaching the key level of 91.00.
The US Dollar DXY Index focuses attention on risk trends and data
The DXY index moves higher for the second day in a row and they are slowly moving towards the key barrier at the 91.00 level on Thursday.
The feeling of Risk aversion in the markets continues to benefit the recovery in dollar demand despite continued declines in key US 10-year benchmark yields, which have returned to 1.00%.
The dollar was apathetic after the Fed kept its monetary policy stance unchanged at Wednesday’s meeting and the president Powell will reiterate once again that any form of adjustment or modification of his current monetary policy is a long way off. for the moment.
The current pullback in the stock markets, with the VIX index (Wall Street’s fear gauge) climbing above the 37.0 level for the first time since November 2020, it also benefits the demand for the safe-haven USD.
Turning to US data, advanced fourth-quarter GDP figures will draw investors’ attention, followed by initial jobless claims, preliminary trade balance figures, and December new home sales. .
What can we expect around the USD?
The DXY index extends the rally near the 91.00 level amid alternating trends in risk appetite. However, the occasional bullish attempts in the dollar are expected to be short-lived amid the fragile outlook for the dollar in the short / medium term for now amid massive fiscal and monetary stimulus in the US economy. In the US, 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 advancing 0.16% on the day, trading at 90.78. A breakout of 91.01 (December 21 high), would open the door to 91.96 (100-day SMA) and to 92.46 (23.6% Fibonacci retracement of the 2020-2021 dip). On the other hand, initial support is at 90.21 (21-day SMA), followed by 89.20 (January 6 low) and finally 88.94 (March 2018 low).
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