US Dollar Index flirts with session tops above 91.20

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  • DXY leaps higher and tests session highs beyond 91.20.
  • US Initial Claims came in above estimates during last week.
  • Housing data, CB’s Leading Index next of note in the calendar.

The greenback manages to gather further steam, leaves behind earlier pessimism and clinches daily highs past 91.20 when tracked by the US Dollar Index (DXY) on Thursday.

US Dollar Index supported around 91.00

The index so far reverses Wednesday’s negative session, although it keeps navigating the lower bound of the recent range near the 91.00 neighbourhood.

The dollar grabs extra buying interest after the ECB’s C.Lagarde ruled out any correlation between modifications of the Fed’s policy and the ECB’s. Lagarde also said that a reduction of PEPP purchases was not debated among the Council members and that any discussion on tapering is so far premature. Any reduction in the pace of PEPP purchases will be data dependant.

Back to the US docket, weekly Claims rose less than expected by 547K, while the Chicago Fed index improved to 1.71 for the month of March (from -1.20).

Later in the session, Existing Home Sales are due seconded by the CB Leading Index.

What to look for around USD

The dollar manages to regain some composure after bottoming out in sub-91.00 levels earlier in the week, always amidst the renewed soft note in US yields and the loss of enthusiasm on the US reflation/vaccine trade. Also weighing on the buck emerges the mega-accommodative stance from the Fed (until “substantial further progress” in inflation and employment is made) and hopes of a strong global economic recovery, all morphing into a source of support for the risk complex and a most likely driver of probable weakness in the dollar in the second half of the year.

Key events in the US this week: Flash Markit Manufacturing PMI (Friday).

Eminent issues on the back boiler: Biden’s new stimulus bill worth around $3 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

At the moment, the index is gaining 0.11% at 91.22 and a break above 91.64 (50-day SMA) would open the door to 92.11 (200-day SMA) and finally 93.43 (2021 high Mar.31). On the other hand, the next support emerges at 90.85 (weekly low Apr.20) ahead of 89.68 (monthly low Feb.25) and then 89.20 (2021 low Jan.6).

 

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