US Dollar Index flirts with daily highs around 90.50

• DXY moves higher and approaches the 90.50 level.
• The risk aversion mood lends support to the dollar on Friday.
• Retail Sales, Industrial Production, U-MIch index of note later in the session.

The greenback regains the buying interest and lifts the US Dollar Index (DXY) to the area of session tops in the mid-90.00s.

US Dollar Index focused on data, risk trends

Following Thursday’s inconclusive session, the index manages to regain attention at the end of the week, always well above the key barrier at 90.00 the figure.

In the meantime, the sentiment in the risk complex remains sour in spite of the recently announced $1.9 trillion stimulus package unveiled by President-elect Biden on Thursday and after Fed’s Powell ruled out any move on rates (hikes, of course) or the bond-buying programme for the time being.

On the other front, yields of the key US 10-year reference seem to have met some decent support in the 1.10% area earlier in the session and advance to the vicinity of 1.11% at the time of writing.

Later in the NA session, Retail Sales will take centre stage in the first turn seconded by Industrial Production for the month of December, Producer Prices, the NY Empire State Index and January’s advanced Consumer Sentiment gauge.

What to look for around USD

The index regained buying interest after bottoming out in the 89.20 area in the first trading week of the new year and managed to advance to the proximity of 90.70 earlier this week, where some relevant resistance turned up. The recovery in US yields keeps lending support to the greenback as investors continue to perceive a potential pick-up in inflation pressure/expectations in response to the most likely increment in fiscal stimulus under a Democrat White House. However, the outlook for the greenback remains fragile in the short/medium-term for the time being amidst 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 gaining 0.19% at 90.41 and a breakout of 90.72 (2021 high Jan.11) would open the door to 91.01 (weekly high Dec.21) and finally 91.23 (weekly high Dec.7). On the other hand, immediate contention emerges at 89.20 (2021 low Jan.6) followed by 88.94 (monthly low March 2018) and the 88.25 (monthly low February 2018).