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  • DXY trades on a firm note around the 90.00 mark on Friday.
  • Higher US yields keep lending support to the dollar.
  • Nonfarm Payrolls will take centre stage later in the session.

The greenback, in terms of the US Dollar Index (DXY), extends the weekly recovery and reclaims the key barrier at 90.00 the figure on Friday.

US Dollar Index looks to yields, data

The index navigates the third consecutive session with gains and manages to surpass the key hurdle around 90.00 and test the 21-day SMA in the 90.10/15 band, always amidst the recovery in US yields as the ultimate driver of the rebound from Wednesday’s lows.

In fact, yields of the US 10-year reference managed to regain the area above the key 1.0% mark in past sessions, levels last seen back in February 2020. In addition, the persistent pick up in coronavirus cases around the world also provides some support of the current bout of risk aversion.

In the data space, it is Payrolls day, although consensus expects a meagre creation of 71K jobs in December, while the Unemployment Rate is expected to tick higher to 6.8% (from 6.7%). Additional data include monthly Wholesale Inventories and Consumer Credit Change for the month of November and the speech by FOMC’s R.Clarida (permanent voter, dovish).

What to look for around USD

The index regains some buying interest and manages to leave behind recent lows in the 89.20 region, mainly on the back of the recovery of US 10 yields while the risk complex seems to be taking a breather. However, the outlook for the greenback remains immersed into the bearish side for the time being amidst 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 gaining 0.24 at 90.04 and a breakout of 91.01 (weekly high Dec.21) would aim for 91.23 (weekly high Dec.7) and finally 91.92 (23.6% Fibo of the 2017-2018 drop). On the other hand, the next support is located at 89.20 (2021 low Jan.6) followed by 88.94 (monthly low March 2018) and the 88.25 (monthly low February 2018).