- DXY index extends bounce near 98.70.
- Investors’ attention is focused on the inversion of the US yield curve.
- Factory orders data for February stands out on the US economic calendar.
The US dollar index DXYwhich measures the strength of the dollar against a basket of major currencies, extends recent gains and retry the 98.65/70 region during the European session on Monday.
DXY index focuses attention on the Fed and geopolitics
The DXY index advances for the third consecutive day on Monday and is off last week’s lows in the 97.70 region.
The lack of positive news from the war in Ukraine seems to give some support to the safe-haven USD coupled with growing speculation of the Fed tightening rates in the coming months. Also, Friday’s release of a fairly strong labor market report backs up the latter view.
In the US money markets, The yield curve inverted on Friday, once again sparking some concerns that the US economy could slip into recession. in the medium term as a response to the possible higher rate of tightening by the Federal Reserve.
Regarding the US economic data, today the publication of factory orders for the month of February stands out.
What can we expect around the USD
The DXY index managed to regain strong traction to the upside after bottoming out at the 97.70 region in the second half of last week. Meanwhile, the very short-term price action in the dollar continues to be dictated by geopolitics, while the case for a stronger dollar in the medium/long term remains well supported by the current narrative of high inflation, a possible more aggressive Fed tightening stance and the strong performance of the US economy.
Relevant DXY US Dollar Index Levels
At time of writing, the DXY index is up 0.02% on the day, trading at 98.62. A break above 99.36 (28 Mar high), would open the door to 99.41 (7 Mar high) and 100.00 (psychological level). On the other hand, the next support appears at 97.68 (March 30 low), followed by 97.16 (55-day SMA) and 96.66 (100-day SMA).
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
