US Dollar Index set to extend its slump behind FOMC's dovish tone – Westpac
|The Q1 DXY recovery was repeatedly interrupted by multi-day setbacks, but so far in April, it has slipped almost every day without respite. Economists at Westpac are looking for more DXY downside, with US yields contained by Powell’s resolutely dovish stance and Europe rebound optimism building as vaccinations gather pace.
The FOMC's dovish tone was another setback for the US dollar as it extended its April slide
“DXY poised for more weakness with US yields contained by Fed Chair Powell’s resolutely dovish stance and pessimism toward Europe continuing to moderate on the vaccination and fiscal fronts.”
“DXY could make a last-ditch attempt to prove itself if April payrolls blow past expectations. An outsized 1mn+ gain would sustain hopes the US can claw back the outstanding 8.4mn pandemic job losses sooner than expected.”
“If the DXY does not capitalise on a potentially strong April jobs report, the US macro-outperformance trade will be consigned to history, setting up DXY for a test of the early Jan 2021 lows at 89.23.”
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