Search ForexCrunch
  • The index adds to Friday’s gains near the 90.80 region.
  • February starts with the sentiment tilted to the risk-off trade.
  • Focus is on the discussion of the US fiscal stimulus.

The greenback starts the week on the bid side and lifts the US Dollar Index (DXY) to fresh peaks in the 90.80/85 band.

US Dollar Index focused on data, stimulus

The index advances for the second session in a row and approaches the 91.00 hurdle on Monday, always on the back of the softer note surrounding the risk-associated assets.

DXY once again flirts with the 2020-2021 resistance line around 90.80, which emerges as the initial barrier towards a potential test of the key resistance zone in the 91.00 neighbourhood (January 18).

In the meantime, the upside momentum in the dollar appears propped up by investors’ doubts surrounding the imminent debate around extra fiscal stimulus by US policymakers (due later in the week) and the potential impact on growth prospects of the slow vaccine rollout.

Later in the US docket, the ISM Manufacturing will take centre stage seconded by the final Manufacturing PMI for the month of January measured by Markit.

What to look for around USD

DXY regains upside traction and looks to re-visit the vicinity of the 91.00 level amidst a broad-based offered note in the risk complex. 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 advancing 0.24% at 90.80 and a breakout of 91.01 (weekly high Dec.21) would open the door to 91.91 (100-day SMA) and finally 92.46 (23.6% Fibo of the 2020-2021 drop). On the flip side, initial support aligns at 90.27 (21-day SMA) followed by 89.20 (2021 low Jan.6) and finally 88.94 (monthly low March 2018).