US Dollar Index Turns Positive Above 90.50

• DXY reverses the initial drop and recovers the 90.50 level.
• The Empire State Index of the United States surprised to the upside in February.
• Rising yields helped the dollar rally on Tuesday.

The US Dollar Index (DXY), which measures the dollar against a package of its main competitors, now recovers the positive terrain and retakes 90.50 and above.

US Dollar Index Strengthened with Rising Yields

The index leaves the initial pessimism behind and regains its smile after the persistent upward movement in US yields. In fact, US 10-year yields rise further and hit new yearly highs above 1.26%, an area last visited in March 2020.

In the US data space, the New York Empire State Index topped estimates at 12.10 in February ahead of December ICT flows and M. Bowman’s speech (permanent voter, centrist) of the FOMC.

What to look for around USD

The corrective downside of the index appears to have recently found decent support near the 90.30 / 20 zone. The dollar price action appears to have decoupled somewhat from the behavior of US yields in recent days, while the continuation of the dollar’s downtrend seems the most likely scenario for the moment in the context of the fragile outlook for the currency. in the medium / long term. Meanwhile, the current massive monetary / fiscal stimulus in the US economy, the Fed’s “longer down” stance, and prospects for a strong recovery in the global economy are expected to keep any serious bullish attempts in the future well contained. dollar.

Technical levels

Right now, the index is losing 0.19% at 90.31 and faces initial support 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 91.58 (10-day SMA) would open the door to 91.60 (February 5, 2021 high) and finally 92.46 (23.6% Fibonacci from the 2020-2021 dip).