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  • DXY keeps the offered tone unchanged around 90.00.
  • US 10-year yields appear side-lined around 1.65%.
  • US Initial Claims rose by 444K during last week.

The greenback, in terms of the US Dollar Index (DXY), keeps the bearish note intact around the 90.00 mark in the second half of the week.

US Dollar Index loses momentum post-Fed

The index fades part of Wednesday’s strong advance and returns to the 90.00 neighbourhood amidst the resurgence of the buying pressure in the risk-associated universe and the inconclusive performance around US yields.

Indeed, yields of the US 10-year reference move within a consolidative range around 1.65%, coming under some downside pressure after Wednesday’s tops near 1.70% soon after the release of the FOMC Minutes.

In the US data space, Initial Claims rose by 444K from a week earlier, bettering expectations. On the not so bright side, the Philly Fed manufacturing gauge came in below forecasts at 31.5 for the current month, also easing from the April’s 50.2 print.

What to look for around USD

The index has so far met strong support in the 89.70 region, although the Fed-led recovery seems to have met initial resistance in the low-90.00s for the time being. Looking at the broader scenario, the negative stance on the currency seems to prevail among market participants. This view has been exacerbated following April’s Payrolls, hurting at the same time the sentiment surrounding the imminent full re-opening of the US economy, which is in turn sustained by the unabated strength in domestic fundamentals, the solid vaccine rollout and once again the resurgence of taper talk in the wake of the latest FOMC Minutes.

Key events in the US this week: Flash Manufacturing PMI, Existing Home Sales (Friday).

Eminent issues on the back boiler: Biden’s plans to support infrastructure and families, worth nearly $4 trillion. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. US real interest rates vs. Europe. Could US fiscal stimulus lead to overheating?

US Dollar Index relevant levels

Now, the index is losing 0.20% at 89.99 and faces the next support at 89.68 (monthly low May 19) followed by 89.20 (2021 low Jan.6) and then 88.94 (monthly low March 2018). On the other hand, a breakout of 90.90 (weekly high May 11) would open the door to 91.07 (100-day SMA) and finally 91.43 (monthly high May 5).

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