- DXY bounces off weekly lows near 99.60.
- US yields reverse course and are now trading modest gains.
- US retail sales expanded in one month by 0.5% in March.
The dollar quickly left the weekly low area around 99.60 and broke above the 100.50 level to post new highs when measured by the US dollar index (DXY) Thursday.
US dollar index returns above 100.00 after ECB
The index moderated Wednesday’s decline after the ECB disappointed those hoping for a convincing hawkish message, ultimately prompting the euro to trim earlier gains and extend the decline to fresh year-to-date lows below 1.0800.
On the US economic docket, core retail sales expanded 0.5% mom in March, slightly below estimates, while core sales surprised to the upside by expanding 1.1% month-on-month. Additionally, initial claims increased by 185,000 in the week to April 9.
What to look for around USD
The dollar rally resumed the upside and advances to fresh cycle highs above 100.50 in line with the resumption of the bullish bias in US yields on Thursday. Thus far, dollar price action continues to be dictated by the likelihood of a tighter rate path from the Fed and geopolitics. Furthermore, the case for a stronger dollar also remains well supported by high US yields and the strong performance of the US economy.
Technical levels
Now, the index advances 0.67% to 100.51 and the break of 100.55 (monthly high of May 14, 2020) would open the door to 100.86 (high of April 24, 2020) and finally to 100.93 (monthly high of April 11 of 2020). On the downside, initial support is found at 97.68 (weekly low Mar 30), followed by 96.96 (100-day SMA) and then 95.67 (weekly low Feb 16).
Source: Fx Street
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