- The positive side of the DXY was exhausted at the 92.40 area.
- US yields betray part of the previous advance.
- US producer prices rose 1.0% month-on-month, up 4.2% year-on-year in March.
The US Dollar Index (DXY), which tracks the dollar against a set of its main competitors, maintains the offered tone unchanged, although it operates below the daily highs near 92.40.
US dollar index rises on rising yields
The index managed to hit daily highs in the 92.40 / 45 zone early in the session, although it did cut a few pips shortly thereafter.
However, the broad daily tone remains positive and always supported by the moderate rally in US yields, particularly the 10-year benchmark. In fact, 10-year yields approached the 1.70% level after bottoming out near 1.60% just in the previous session.
Looking at the bigger picture, the dollar has lagged so far this week after investors turned their attention to the progress of the vaccination campaign in the Old Continent and the impact on growth prospects.
Looking at the US data, leading producer prices for March increased 1.0% month-on-month and 4.2% year-on-year, while core prices rose 0.7% month-on-month and 3.1% year-on-year. Later on Friday, February wholesale inventories will close the calendar.
What to look for around USD
Bullish momentum in the dollar wavered ahead of the 93.50 region in past sessions, triggering a corrective decline in the vicinity of the 92.00 region. The dollar is now seen under some downward pressure as US reflation trading and the idea of ​​higher inflation in the coming months lost some steam. Furthermore, the Fed’s mega-accommodative stance (until “further substantial progress” is made in inflation and employment) and hopes for a strong global economic recovery (now postponed to the end of the year) remain a source of support for the risk space and have the potential to reduce the dollar’s bullish momentum in the second half of the year.
Relevant levels
At the moment the index is gaining 0.24% to 92.28 and a break above 93.43 (March 31, 2021 high) would expose 94.00 (round level) and finally 94.30 (November 4 monthly high). On the other hand, the next containment arises at 91.99 (weekly low on April 8) followed by 91.52 (50-day SMA) and then 91.30 (weekly low on March 18).
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