US Dollar Index Tests Support at 92.00

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  • DXY challenges key support at 92.00 on Tuesday.
  • US 10-year yields trim gains and fall to the 1.66% area.
  • The US CPI increased 0.6% month-on-month and 2.6% year-on-year during March.

Increasing selling pressure around the dollar is now dragging the US Dollar Index (DXY) to new weekly lows near 92.00.

US Dollar Index Offered After CPI

The index is now cutting ground for the second consecutive session and flirting with weekly lows near 92.00, after US inflation figures weren’t enough to reignite another bout of strength in both the dollar and US yields. USA

In fact, yields on the key 10-year US benchmark fell to the region of 1.66% shortly after the headline CPI rose 0.6% monthly and 2.6% over the last twelve months, while the CPI underlying gained 0.3% from the prior month and 1.6% on an annualized view.

Still on the US calendar, the NFIB Business Optimism Index improved to 98.2 in March (from 95.8). Later in the American session, API will report on US crude oil reserves ahead of speeches by Daly (voter, centrist) of the San Francisco Fed, George (2022 voter, aggressive) of the Fed of Kansas and Atlanta Fed Bostic (voter, centrist).

What to look for around USD

The dollar continues to navigate the lower bound of the recent range just above the 92.00 zone after being rejected from the yearly highs near 93.50 in March. The DXY now appears to be under downward pressure as investors appear to have already traded in the US vaccine / reflation trade In addition, the Fed’s mega-accommodative stance (until “substantial progress on 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 complex and have the potential to reduce the dollar’s bullish momentum in the second half of the year.

Technical levels

At the moment, the index is shedding 0.09% at 91.99 and faces the next support at 91.52 (50-day SMA) followed by 91.30 (weekly low on March 18) and then 91.04 (100-day SMA). On the upside, a break above 93.43 (March 31, 2021 high) would expose 94.00 (round level) and finally 94.30 (November 4, monthly high).

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