- DXY records new 2021 highs around 92.60 on Wednesday.
- US Durable Goods Orders contracted 1.1% MoM in February.
- Chief Powell will testify before the US Senate later in the session.
The greenback, when gauged by the US Dollar Index (DXY), remains well bid near recent tops in the 92.50/60 band.
US Dollar Index up on yields bounce
The bid bias around the dollar remains well in place so far this week and pushes the index to the area last seen in November 2020 around 92.60.
The move higher in the buck comes amidst the usual narrative around the US economic recovery and the rebound in US 10-year yields, which manage to regain the 1.65% area after dropping below 1.60% earlier in the session.
In the US data space, headline Durable Goods Orders contracted at a monthly 1.1% in February, while the core orders dropped 0.9% inter-month. In addition, flash Manufacturing PMI is expected a 59.0 for the current month, a tad below estimates (59.3).
What to look for around USD
The greenback manages well to extend further the breakout of the 92.00 mark and clinches new tops around 92.60, area coincident with the critical 200-day SMA. The recently approved fiscal stimulus package adds to the ongoing outperformance of the US economy narrative as well as the investors’ perception of higher inflation in the next months, all morphing into extra oxygen for the buck. However, 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 remain an omnipresent source of support for the risk complex and carry the potential to contain the upside momentum in the dollar.
Key events in the US this week: Chairman Powell’s testimony before the Senate (Wednesday) – Final Q4 GDP, Initial Claims (Thursday) – February’s PCE, Personal Income/Spending, final U-Mich Index (Friday).
Eminent issues on the back boiler: 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? Future of the Republican party post-Trump acquittal.
US Dollar Index relevant levels
At the moment, the index is gaining 0.18% at 92.50 and a breakout of 92.60 (2021 high Mar.24) would expose 92.61 (200-day SMA) and finally 94.30 (monthly high Nov.4). On the other hand, the next support is located at 91.30 (weekly low Mar.18) seconded by 91.05 (high Feb.17) and then 90.98 (50-day SMA).
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