US Dollar Index consolidates Friday’s gains around 90.00

US dollar index (DXY) fails to extend Friday’s bounce off 4.5-month low, refreshing intraday bottom with 89.97 level, as European traders prepare for Monday’s bell. The greenback gauge jumped during late Friday amid tapering concerns. Though, a lack of major directives afterward weighs on the US Treasury yields and greenback by the press time.

Strong PMIs for May keep reflation fears on the table, which in turn pushed Atlanta Federal Reserve President Raphael Bostic and Philadelphia Fed President Patrick Harker to join Dallas Federal Reserve Bank President Robert Kaplan and back the need for tapering talks.

The fears of dialing back the Fed’s easy money put a safe-haven bid under the DXY but markets struggle for fresh clues then after and hence the greenback continues on its bearish trajectory as the market welcomes upbeat activity numbers amid a light calendar and thin news feed.

It’s worth mentioning that the gold’s run-up exerts downside pressure on the US Treasury yields and the US dollar as well.

That said, the US 10-year Treasury yield drops 1.4 basis points to 1.618% whereas the S&P 500 Futures rise 0.23% by the press time.

Given the lack of important catalysts during the European session, the latest DXY weakness could continue ahead of more activity figures, from Chicago Fed. Also important will be the comment from Fed Governor Lael Brainard.

Although upbeat data could help US Treasury yields, Fed’s Brainard should dump his cautious optimism to recall the DXY bulls.

Technical analysis

Unless crossing a two-month-old falling trend line resistance, around 90.45, DXY bulls are less likely to return.