Search ForexCrunch
  • DXY loses the grip following fresh 2021 peaks.
  • Risk-on sentiment returns to the markets on Tuesday.
  • IBD/TIPP Index, Fedspeak, API next in the calendar.

The greenback, when tracked by the US Dollar Index (DXY), loses some upside momentum and retreats to the sub-91.00 area on turnaround Tuesday.

US Dollar Index looks to risk trends, politics

The index trades on the defensive after two consecutive daily advances and recedes to sub-91.00 levels after reaching new yearly tops near 91.10 at the beginning of the week.

The strong advance in the dollar at the beginning of the week found extra oxygen in the moderate correction lower in EUR/USD, in turn fuelled by speculations that the economic recovery could be losing momentum in the Old Continent.

Later in the US data space, the IBD/TIPP Index is only due seconded by the API’s weekly report on US crude oil stockpiles. In addition. Cleveland Fed L.Mester (2022 voter, hawkish) and NY Fed J.Williams (permanent voter, centrist).

What to look for around USD

DXY regained upside traction and clinched new YTD highs just beyond 91.00 on Monday on the back of the renewed offered bias in the risk-associated galaxy. Occasional bullish attempts in the dollar, however, are expected to remain somewhat contained amidst the fragile outlook for the greenback in the medium/longer-term, and always against the backdrop of the current massive monetary/fiscal stimulus in the US economy, the “lower for longer” stance from the Federal Reserve and prospects of a strong recovery in the global economy.

US Dollar Index relevant levels

At the moment, the index is retreating 0.13% at 90.86 and faces initial support at 90.33 (21-day SMA) followed by 89.20 (2021 low Jan.6) and finally 88.94 (monthly low March 2018). On the upside, a breakout of 91.06 (2021 high Feb.1) would open the door to 91.89 (100-day SMA) and finally 92.46 (23.6% Fibo of the 2020-2021 drop).