US Dollar Index stays under pressure near 92.80 ahead of NFP
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US Dollar Index stays under pressure near 92.80 ahead of NFP

  • DXY extends the break below the key 93.00 mark.
  • Trade conditions, volatility remain reduced on Good Friday.
  • Markets’ attention will be on the March’s Nonfarm Payrolls.

The greenback, in terms of the US Dollar Index (DXY), struggles for direction below the 93.00 level on Good Friday.

US Dollar Index looks to Payrolls

The index extends the bearish note fort yet another session following Wednesday’s rejection from YTD highs in the vicinity of 93.50.

In fact, DXY now loses ground for the third consecutive session on Friday, reflecting the drop in US 10-year yields to the 1.67% area on Thursday after climbing as high as the vicinity of the 1.80% mark earlier in the week.

On the broader front, and despite losing some traction in past hours, the strong expectations of a solid performance of the US economy, in particular vs. its G10 peers, continued to lend legs to the buck. President Biden’s plans to boost the infrastructure, manufacturing and health via a nearly $2.3 trillion programme in the next years have been also supporting the dollar’s momentum this week.

Later in the NA session, all the attention is expected to be on the publication of the Nonfarm Payrolls for the month of March. Consensus expects a strong print near 650K on the back of recent re-openings in the US economy helped by the strong vaccine rollout.

What to look for around USD

The upside momentum in the dollar faltered ahead of the 93.50 region this week, sparking a corrective downside. Supporting the recent rally in the index, the breakout of the 200-day SMA seems to bolster the now constructive view on the buck, at least in the near-term. In addition, the recently approved fiscal stimulus package adds to the ongoing outperformance of the US economy narrative as well as the investors’ perception of higher inflation in the next months, all morphing into extra oxygen for the buck. However, the mega-accommodative stance from the Fed (until “substantial further progress” in inflation and employment is made) and hopes of a strong global economic recovery (now postponed to later in the year) remain a source of support for the risk complex and carry the potential to curtail the upside momentum in the dollar in the longer run.

Key events in the US this week: Nonfarm Payrolls (Friday).

Eminent issues on the back boiler: Biden’s new stimulus bill worth around $3 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? Future of the Republican party post-Trump acquittal.

US Dollar Index relevant levels

At the moment, the index is losing 0.08% at 92.85 and faces the next support at 92.45 (200-day SMA) followed by 91.30 (weekly low Mar.18) and then 91.05 (100-day SMA). On the other hand, a break above 93.43 (2021 high Mar.31) would expose 94.00 (round level) and finally 94.30 (monthly high Nov.4).

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