Dollar index holds above 90 as S&P 500 futures drop

• The dollar index defends key support as risk rally stalls. 
• The greenback’s broader trend remains bearish as Fed taper unlikely anytime soon.
• A renewed rally in US Treasury yields could complicate matters for the dollar bears.

The dollar index, which tracks the greenback’s value against majors, defends the psychological support of 90.00 alongside moderate losses in the US stock futures. 

At press time, the DXY is seen at 90.12, having printed alow of 90.04 during the overnight trade. The anti-risk greenback’s descent has stalled as the 0.15% drop in the S&P 500 futures suggests a bull breather following a rally to record highs in the run-up to the US Presidential inauguration. 

However, according to Guggenheim Partners’ Chief Investment Officer Scott Minerd, the broader trend remains bearish, courtesy of Federal Reserve’s open-ended asset purchase (QE) program. Expectations for general fiscal spending under Joe Biden’s Presidency is also expected to keep the dollar on the offer. 

What’s more, the Federal Reserve recently squashed hopes of early QE taper. According to Bank of America, a reduced pace of asset purchases could still be a year away, depending on the evolution of US growth and inflation. 

That said, if the impending fiscal spending lifts Treasury yields, the dollar will likely find bids. At press time, the 10-year yield is seen at 1.11%, having risen from 0.90% to 1.18% earlier this month. 

Technical levels