US dollar index jumps to daily highs around 90.50

• The DXY index reverses the recent drop and retests the 90.50 region.
• US 10-year yields are approaching the key 1.40% level.
• The Chicago Fed Index, the Dallas Fed Index, and a Fed Speech feature prominently on today’s US economic calendar.

The US dollar DXY index, which measures the strength of the dollar against a basket of the main currencies, begins the European session with a positive tone and advances to daily highs around the 90.50 region Monday.

DXY US Dollar Index focuses attention on data and returns

The DXY index gains some upward pressure and recovers from two consecutive daily declinesas the dollar continues to gain support from higher US yields. Against that, 10-year US Treasury yields are already moving near the key 1.40% barrier, an area last visited a year ago.

Meanwhile, market participants continue analyzing the reflation trade, the launch of vaccines and additional US fiscal stimulus. as the immediate drivers of price action around the DXY index for now.

As for the US data, the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Index will be released today. Additionally, FOMC permanent voter M. Bowman has a speech scheduled.

What can we expect around the USD?

The DXY index’s corrective rally appears to have hit a decent hurdle near the 91.00 region, always following the renewed correlation with US yields. However, bullish attempts on the dollar should remain short-lived, amid the fragile overall outlook for the currency in the medium / long term. Meanwhile, 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, are anticipated. expected to become an additional appetite for riskier assets.

Key events this week in the US: Consumer Confidence Measured by the Conference Board (Tuesday), President Powell’s Semi-Annual Monetary Policy Report (Wednesday), Fourth Quarter GDP Review and Initial Jobless Claims (Thursday), and PCE-Measured Inflation Figures and the final reading of consumer sentiment (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. Could US fiscal stimulus cause overheating? Future of the Republican Party after Trump’s acquittal.

Relevant levels of the US dollar DXY index

At the time of writing, the DXY index is gaining 0.05% on the day, trading at 90.40. A breakout of 91.05 (February 17 high) would open the door to 91.46 (100-day SMA) and at 91.60 (February 5 high). On the other hand, immediate support is at 90.22 (Feb 16 low), followed by 90.04 (Jan 21 low) and 89.20 (Jan 6 low).