US Dollar Index clings to gains around 91.00

DXY sticks to the positive ground around 91.00.
US 10-year yields advance to the vicinity of the 1.60% level.
CB’s Consumer Confidence surprised to the upside in April.

Pablo Piovano FXStreet

The greenback clings to daily gains and looks to retake the 91.00 hurdle on a convincing fashion when tracked by the US Dollar Index (DXY).

US Dollar Index cautious ahead of FOMC

The index manages to trade on a positive note so far on Tuesday amidst rising cautiousness among investors ahead of the FOMC event on Wednesday.

In the meantime, yields of the US 10-year reference post small gains around the 1.58% zone, creeping higher following recent lows near 1.53%.

Renewed concerns over the pick-up in coronavirus cases in India appear to have lent some oxygen to the dollar via the resurgence of the risk aversion among market participants.

In the US data space, house prices tracked by the S&P/Case-Shiller Index rose 11.9% on a year to February, while prices tracked by the FHFA’s House Price Index gained 12.2% YoY in the same period.

In addition, the Consumer Confidence gauged by the Conference Board improved above estimates to 121.0 for the current month (from 109.0).

What to look for around USD

The April pullback in the dollar remains well and sound, always on the back of the broad-based retracement in US yields and the loss of enthusiasm on the US reflation/vaccine trade. Also weighing on the buck emerges the mega-accommodative stance from the Fed (until “substantial further progress” in inflation and employment is made), and rising optimism on a strong global economic recovery, all morphing into a solid source of support for the risk complex and a most likely driver of probable weakness in the dollar in the next months.

Key events in the US this week: CB Consumer Confidence (Tuesday) – FOMC meeting (Wednesday) – Flash Q1 GDP, Initial Claims (Thursday) – Core PCE, Personal Income/Spending, final April U-Mich Index.

Eminent issues on the back boiler: Biden’s new infrastructure 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?

US Dollar Index relevant levels

Now, the index is gaining 0.07% at 90.90 and a break above 91.67 (50-day SMA) would open the door to 92.04 (200-day SMA) and finally 93.43 (2021 high Mar.31). On the flip side, the next support emerges at 90.68 (monthly low Apr.26) ahead of 89.68 (monthly low Feb.25) and then 89.20 (2021 low Jan.6).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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