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.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold holds above $5,000 as bears seem hesitant amid Fed rate cut bets

Gold edges lower at the start of a new week, though it defends the $5,000 psychological mark through the Asian session. The underlying bullish sentiment is seen acting as a headwind for the bullion. However, bets for more rate cuts by the Fed, bolstered by Friday's softer US CPI, keep the US Dollar bulls on the defensive and continue to support the non-yielding yellow metal as the focus now shifts to FOMC Minutes on Wednesday.

Week ahead: Data blitz, Fed Minutes and RBNZ decision in the spotlight

The US jobs report for January, which was delayed slightly, didn’t do the dovish Fed bets any favours, as expectations of a soft print did not materialize, confounding the raft of weak job indicators seen in the prior week.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.