- DXY gains extra steam and hits 3-day highs near 90.70.
- Rising US yields support the dollar’s daily gains.
- The February flash figures for consumer confidence appear below.
The US Dollar Index (DXY), that tracks the dollar vs. a group of its main rivals are trading in improved mood above 90.70, or 3-day highs, on Friday.
Strongest US Dollar Index by Yields
The index regains its smile after five consecutive sessions with losses and manages to bounce off weekly lows in the vicinity of the 90.20 region.
Meanwhile, the moderate rise in 10-year benchmark returns to levels above 1.18% gives the dollar fresh oxygen and pushes the index to fresh multi-day highs.
Furthermore, investors’ profit-taking mood continues to hurt the risk complex and adds to the dollar’s daily rally.
Later in the American session, the preliminary indicator of US consumer sentiment followed by the U-Mich index will take center stage alongside the speech by the New York Fed J. Williams (permanent voter, centrist).
What to look for around USD
The corrective downside of the dollar appears to have found decent support near 90.20 so far this week. Occasional bouts of strength in U.S. yields remain the almost exclusive driver of bullish attempts in the dollar, which helped with prospects for strong growth and the auspicious (and rapid) launch of vaccines against its peers. G10. The continuation of the downtrend of the dollar seems the most likely scenario in the context of the fragile prospects for the currency in the medium / long term, and always amid the current massive monetary / fiscal stimulus in the US economy, the “lowest for longer for longer ”from the Fed and prospects for a strong recovery in the world economy, which is expected to be transformed into an additional appetite for riskier assets.
Technical levels
At the moment, the index is gaining 0.32% to 90.70 and a breakout of 91.60 (February 5, 2021 high) would open the door to 91.66 (100-day SMA) and finally to 92.46 (23.6% Fibonacci from the fall of 2020-2021). On the other hand, the initial support is located at 90.25 (weekly low of February 10) followed by 90.04 (weekly low of January 21) and then 89.20 (low of January 6, 2021).
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