Search ForexCrunch
  • DXY’s strong advance met resistance near 90.30 on Thursday.
  • Yields of the US 10-year note ease from tops near 1.70%.
  • Initial Claims, Philly Fed Index, Leading Index next on tap.

The greenback loses some upside momentum and recedes to the vicinity of 90.00 when gauged by the US Dollar Index (DXY) on Thursday.

US Dollar Index faces initial hurdle at 90.30

The index partially reverses Wednesday’s important advance and gradually approaches the 90.00 neighbourhood, as market participants continue to digest the latest FOMC Minutes.

In fact, and according to the Minutes of the April 27-28 Fed meeting, the Committee acknowledged the positive pace of the US economic recovery and reiterated that higher inflation in the next month is due to base effects. However, “a number of participants” opened the door to a modification of the bond purchase programme if the economy moves closer to the Fed’s targets of employment and inflation sooner than anticipated.

In the same line, FOMC’s R.Quarles reiterated that bouts of temporary higher consumer prices are likely pari passu with the gradual re-opening of the economy.

The ongoing knee-jerk in the dollar comes on the back of the move lower in US 10-year yields from Wednesday’s peaks near the key 1.70% yardstick.

Later in the US docket, the usual weekly Claims are due along with the Philly Fed index and the Conference Board’s Leading Index for the month of April.

What to look for around USD

The index has so far met strong support in the 89.70 region, although the Fed-led recovery seems to have met initial resistance in the low-90.00s for the time being. Looking at the broader scenario, the negative stance on the currency seems to prevail among market participants. This view has been exacerbated following April’s Payrolls, hurting at the same time the sentiment surrounding the imminent full re-opening of the US economy, which is in turn sustained by the unabated strength in domestic fundamentals, the solid vaccine rollout and once again the resurgence of taper talk in the wake of the latest FOMC Minutes.

Key events in the US this week: Initial Claims, Philly Fed Index (Thursday) – Flash Manufacturing PMI, Existing Home Sales (Friday).

Eminent issues on the back boiler: Biden’s plans to support infrastructure and families, worth nearly $4 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

Now, the index is losing 0.06% at 90.12 and faces the next support at 89.68 (monthly low May 19) followed by 89.20 (2021 low Jan.6) and then 88.94 (monthly low March 2018). On the other hand, a breakout of 90.90 (weekly high May 11) would open the door to 91.07 (100-day SMA) and finally 91.43 (monthly high May 5).

Expert score

5

Etoro - Best For Beginner & Experts

  • 0% Commission and No stamp Duty
  • Regulated by US,UK & International Stock
  • Copy Successfull Traders
Your capital is at risk.