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  • DXY hovers around the 91.00 area on Monday.
  • US 10-year yields approach the 1.20% mark.
  • There are no data releases scheduled in the US calendar.

The greenback, when gauged by the US Dollar Index (DXY), navigates within a side-lined theme around the 91.00 neighbourhood at the beginning of the week.

US Dollar Index looks to risk trends, yields

The index alternates gains with losses around the 91.00 region on Monday amidst a narrow range trade and following Friday’s strong pullback after reaching new yearly peaks around 91.60.

The move lower in the dollar comes despite the march north in US yields, with the 10-year benchmark gradually approaching the 1.20% level, area last visited in March 2020.

No data releases in the US calendar on Monday should leave all the attention to the performance of yields and the broader risk appetite trends as immediate drivers of the price action for the dollar.

What to look for around USD

The dollar’s upside run out of steam in the 91.60 zone last week. Higher US yields remain the almost exclusive driver of the sentiment around the buck helped with firm growth prospects and auspicious (and fast) vaccine rollout. The continuation of the uptrend in the dollar, however, is forecast to remain somewhat contained amidst the fragile outlook for the currency in the medium/longer-term, and always against the backdrop of the current massive monetary/fiscal stimulus in the US economy, the “lower for longer” stance from the Fed and prospects of a strong recovery in the global economy.

Key events this week in the US: Inflation figures tracked by the CPI/Core CPI, Chief Powell’s speech on “The State of the US Labor Market” (Wednesday) and the preliminary gauge of the Consumer Sentiment for the month of February (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.

US Dollar Index relevant levels

At the moment, the index is gaining 0.07% at 91.11 and a breakout of 91.60 (2021 high Feb.5) would open the door to 91.81 (100-day SMA) and finally 92.46 (23.6% Fibo of the 2020-2021 drop). On the other hand, initial support is located at 90.60 (55-day SMA) followed by 89.20 (2021 low Jan.6) and finally 88.94 (monthly low March 2018).