- DXY now accelerates the decline to the 90.50 area.
- Initial US claims disappointed estimates at 861,000 weekly.
- The Philadelphia Fed index surprised higher at 23.1.
The dollar, in terms of the US dollar index (DXY), further loses control and falls to session lows near 90.50, where the 100/200 hourly SMAs also coincide.
Weaker US dollar index after data
Selling momentum around the index picked up on Thursday after initial claims surged by 861,000 over the past week, a disappointing consensus. On the positive side, the Philadelphia Fed manufacturing indicator improved forecasts to 23.1 in February, although it was down slightly from the January reading (26.5).
Mixed data from the US housing sector saw building permits rise 1.881 million units, or 10.4%, over the past month; while housing construction contracted by 6.0%, to 1,580 million units.
Meanwhile, yields on the 10-year US benchmark continue to rise and retake the 1.30% zone, although the dollar appears to be ignoring this for now.
Also weighing on the dollar, it is worth recalling that the FOMC Minutes noted on Wednesday that members reinforced the dovish Federal Reserve stance, adding that potential bouts of higher inflation are seen as temporary while upholding the promise of the Fed to achieve maximum employment.
What to look for around USD
The corrective rally in the index appears to have recently hit a decent hurdle near the 91.00 stick, always following the renewed correlation with US yields. However, bullish attempts on the dollar should be short-lived amid the fragile outlook for the currency in the medium / long term. The latter is supported by the Fed’s (strengthened) accommodative stance, additional fiscal stimulus and the prospects for a strong recovery in the world economy, which is considered to underpin better confidence in the risk-related space.
Technical levels
At the moment, the index is losing 0.39% to 90.59 and faces immediate contention at 90.22 (weekly low on Feb 16) followed by 90.04 (weekly low on Jan 21) and then 89.20 (low on Jan 6, 2021 ). On the other hand, a breakout of 91.05 (weekly high on Feb 17) would open the door to 91.53 (100-day SMA) and finally 91.60 (high on Feb 5, 2021).
.
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.
