- DXY remains offered and well below the 92.00 level.
- US 10-year yields rebound from sub-1.50% levels.
- Weekly Claims rose by 712K during last week.
The greenback keeps the bearish noted unchanged, although it manages to bounce off earlier lows around 91.50 when tracked by the US Dollar Index (DXY).
US Dollar Index looks to yields
The index now attempts a consolidative theme around the 91.60/50 band, all against the broader 3-day corrective downside and following the softer tone in US yields, particularly after Wednesday’s discouraging inflation figures.
Indeed, some profit taking (in light of recent strong gains) plus the corrective move in yields appear to be weighing on the buck, which has so far held up well around 91.50.
In the US data space, Initial Claims rose 712K WoW, surpassing expectations, and taking the 4-Week Average to 759.00K (from 793.00K). Further data come next with the release of JOLTs Job Openings.
What to look for around USD
The sentiment surrounding the dollar suffered the recent US inflation figures and the subsequent correction to the sub-92.00 region. The change of heart in the buck seen in past weeks came in tandem with the strong bounce in US yields to levels recorded over a year ago, all against the backdrop of rising investors’ perception of higher inflation in the next months. However, a sustainable move higher in DXY should be taken with a pinch of salt amidst the mega-accommodative stance from the Fed (until “substantial further progress” is seen), extra fiscal stimulus and hopes of a strong economic recovery overseas.
Key events in the US this week: Flash February Consumer Sentiment (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 losing 0.15% at 91.68 and faces the next support at 91.50 (weekly low Mar.11) seconded by 91.05 (high Feb.17) and then 90.63 (50-day SMA). On the upside, a breakout of 92.50 (2021 high Mar.9) would expose 92.82 (200-day SMA) and finally 94.30 (monthly high Nov.4).
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