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The DXY Index is on course to close the month of March up nearly 3.0%, which is realised would be the largest percentage gain over a calendar month since November 2016. In the view of economists at MUFG Bank, USD support is set to persist.

Key quotes

“The passing of the $1.9trn package earlier this month no doubt helped lift US consumer confidence. The data yesterday revealed confidence surged from 90.4 to 109.7 – the highest since the COVID-19 crisis began and the biggest one-month gain since April 2003. The jump in the Present Conditions Index – seen as a good proxy of job market conditions, jumped by over 20pts, the largest since April 1974. So with Biden encouraged we see no reason to expect any caution now.”    

“Short-term of course this all paints a positive picture for growth expectations in the US and with FX momentum, positioning and technicals all pointing in favour of further USD strength, the near-term outlook for the dollar remains positive.”

“The big numbers that we will likely hear today by President Biden may well encourage further positive USD momentum but we would caution that hurdles lie ahead that could see the initial plan watered down in order to get through Congress.”