US Dollar struggles for direction just above 90.00

• DXY alternates gains with losses just above the 90.00 level.
• US 10-year yields drop below the 1.10% mark.
• Markit’s flash PMIs, housing data and EIA report next on tap.

The greenback finds it difficult to leave behind the recent weakness and now navigates without a clear direction in the vicinity of the 90.00 mark when tracked by the US Dollar Index (DXY).

US Dollar Index looks to risk trends, data

The index exchanges gains with losses and trades close to the 90.00 mark at the end of the week, all against the backdrop of the renewed drop in US 10-year yields and mitigating upside pressure in the risk complex.

In fact, yields of the key US 10-year benchmark hover around the 1.10% zone, coming down from earlier peaks in the 1.12% region.

In the meantime, the index is on the way to close the first week with losses after two consecutive advances. The recent pick-up in the reflation trade, mainly after Joe Biden’s inauguration and his plans to pump around $1.9 trillion in fiscal stimulus, has been weighing on the buck and sparked the correction lower from tops in the 91.00 region.

In the US data space, Markit will release its advanced PMIs followed by Existing Home Sales and the weekly report on US crude oil supplies by the EIA.

What to look for around USD

DXY’s upside run out of steam in the 91.00 region earlier in the week, sparking a subsequent a corrective move to the vicinity of 90.00. Occasional bullish attempts in the dollar, however, are expected to be short-live amidst the fragile outlook for the greenback in the short/medium-term, and always amidst the 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 losing 0.02% at 90.11 and faces the next support at 89.20 (2021 low Jan.6) followed by 88.94 (monthly low March 2018) and the 88.25 (monthly low February 2018). On the other hand, a breakout of 91.01 (weekly high Dec.21) would open the door to 92.07 (100-day SMA) and finally 92.46 (23.6% Fibo of the 2020-2021 drop).