US Dollar Index clings to gains around 90.00 ahead of data

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  • DXY looks around the 90.00 level on Friday.
  • US 10-year yields creep back above 1.60%.
  • Core PCE, U-Mich Index, Biden’s budget next of note.

The greenback reverses Thursday’s pullback and looks to extend the weekly recovery above the 90.00 yardstick when tracked by the US Dollar Index (DXY).

US Dollar Index focuses on data, Biden

The index manages to regain the smile and keep business around the key 90.00 neighbourhood at the end of the week, leaving behind at the same time Thursday’s pullback.

The better mood in the dollar comes in response to the recovery in US yields and speculations ahead of President Biden’s announcement of a multi-trillion budget (scheduled for later in the NA session).

In fact, yields of the key US 10-year reference extend the move further north of the 1.60% mark following weekly lows in the 1.55% area.

The US data space looks very interesting with the releases of Core PCE, Personal Income/Spending, the final Consumer Sentiment gauge for the month of May, Goods Trade Balance and Wholesale Inventories.

What to look for around USD

The index remains under pressure despite regaining the 90.00 neighbourhood in past hours. Looking at the broader scenario, the negative stance on the dollar seems to prevail among market participants, as speculation of higher inflation in the medium-term now looks to have lost momentum and the US economic outperformance narrative seems almost fully priced in. Bolstering the bearish view on the buck emerges further confirmation of the Fed’s mega-accommodative stance for the foreseeable future, as per recent FOMC Minutes and Fed-speakers.

Key events in the US this week: Core PCE, Personal Income/Spending, final U-Mich Index, President Biden’s budget announcement (Friday).

Eminent issues on the back boiler: Biden’s plans to support infrastructure and families, worth nearly $6 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 gaining 0.14% at 90.13 and a breakout of 90.90 (weekly high May 11) would open the door to 91.08 (100-day SMA) and finally 91.43 (monthly high May 5). On the flip side, the next support is line up at 89.53 (monthly low May 25) followed by 89.20 (2021 low Jan.6) and then 88.94 (monthly low March 2018).

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