US Dollar Index comes under pressure near 91.00

DXY looks weaker and challenges the 91.00 mark.
US 10-year yields bounce off lows near the 1.54% level.
Flash PMIs, housing data next of note in the US calendar.

Pablo Piovano FXStreet

The greenback, in terms of the US Dollar Index (DXY), reverses Thursday’s pullback and revisits the vicinity of the 91.00 neighbourhood at the end of the week.

US Dollar Index looks to risk trends, data

Thursday’s positive price action around the buck has been sustained by the recent pick-up in coronavirus cases – particularly in India and Japan – and President Biden’s plans to increase the capital gains tax.

However, the index resumes the downside and puts the 91.00 mark once again to the test on Friday, always on the back of the better mood in the risk complex and the lack of serious traction in US yields.

Indeed, the dollar loses momentum and extends the choppy activity seen in past sessions while navigating the lower end of the recent range around the key support at the 91.00 zone.

Later in the US calendar, Markit will publish its preliminary PMIs for the month of April seconded by New Home Sales for the month of March.

What to look for around USD

The dollar struggles to keep business around the 91.00 area amidst the ongoing consolidative mood, always looking to the renewed soft note 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 hopes of a strong global economic recovery, all morphing into a source of support for the risk complex and a most likely driver of probable weakness in the dollar in the second half of the year.

Key events in the US this week: Flash Markit Manufacturing PMI (Friday).

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

At the moment, the index is losing 0.27% at 91.03 and faces the next support at 90.85 (weekly low Apr.20) ahead of 89.68 (monthly low Feb.25) and then 89.20 (2021 low Jan.6). On the other hand, a break above 91.65 (50-day SMA) would open the door to 92.08 (200-day SMA) and finally 93.43 (2021 high Mar.31).

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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