• DXY fades Wednesday’s downtick and returns to 91.30.
  • Positive growth outlook, vaccine rollout lend support to the dollar.
  • Initial Claims, Factory Orders next of relevance in the US calendar.

The greenback resumes the upside and lifts the US Dollar Index (DXY) to the area of recent yearly tops around 91.30.

US Dollar Index remains bid and looks to data, yields

The softer tone in the risk complex coupled with higher US yields give further legs to the dollar and propel the index to new YTD peaks in the 91.30/40 band in the second half of the week.

Recent better-than-expected results from US fundamentals plus the vaccine rollout continue to favour better growth prospects vs. overseas economies and sustain the move higher in US yields, all morphing into extra support for the buck.

In the US calendar, the usual weekly Claims are due later in the NA session seconded by Factory Orders for the month of December and the speech by San Francisco Fed M.Daly (voter, centrist).

What to look for around USD

The dollar’s upside remains well and sound and pushed DXY to new YTD highs in the 91.30/40 band on Thursday, always on the back of the renewed offered bias in the risk-associated universe and higher yields in the US bond market. 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.

US Dollar Index relevant levels

At the moment, the index is gaining 0.15% at 91.34 and a breakout of 91.32 (2021 high Feb.4) would open the door to 91.86 (100-day SMA) and finally 92.46 (23.6% Fibo of the 2020-2021 drop). On the flip side, initial support is located at 90.51 (21-day SMA) followed by 89.20 (2021 low Jan.6) and finally 88.94 (monthly low March 2018).

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