- DXY loses further ground and re-visits the 90.40 area.
- Yields of the US 10-year reference reclaim the 1.30% level.
- US flash PMIs, housing data, Fedspeak come up next in the docket.
The greenback, when gauged by the US Dollar Index (DXY), remains under pressure and drops to multi-day lows around 90.40 on Friday.
US Dollar Index looks to data, yields
The index loses ground for the second straight session at the end of the week despite the improved tone in US yields. In fact, DXY now flirts with the 55-day SMA around 90.40 and re-targets the key 2020-2021 support line, coincident with the 90.00 neighbourhood.
Higher yields did not morph into further dollar strength in past hours, allowing the risk complex to regain some ground lost as of late, always against the usual backdrop of the reflation/vaccine trade and rising speculations that a fresh fiscal stimulus package could be approved sooner rather than later.
In the US data space, Markit will publish its preliminary gauges for the Manufacturing/Services PMIs for the month of February seconded by Existing Home Sales and speeches by Richmond Fed T.Barkin (voter, centrist) and Boston Fed E.Rosengren (2022 voter, hawkish).
What to look for around USD
The corrective upside in the index appears to have met a decent hurdle near the 91.00 yardstick recently, always following the renewed correlation to US yields. However, bullish attempts in the buck should remain short-lived amidst the broad-based fragile outlook for the currency in the medium/longer-term. The latter is sustained by the (reinforced) accommodative stance from the Fed, extra fiscal stimulus and prospects of a strong recovery in the global economy, which are seen underpinning the better sentiment in the risk-associated space.
Key events in the US this week: February flash PMIs (Friday).
Eminent issues on the back boiler: 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? Future of the Republican party post-Trump acquittal.
US Dollar Index relevant levels
At the moment, the index is losing 0.24% at 90.37 and faces immediate contention at 90.22 (weekly low Feb.16) followed by 90.04 (weekly low Jan.21) and then 89.20 (2021 low Jan.6). On the flip side, a breakout of 91.05 (weekly high Feb.17) would open the door to 91.49 (100-day SMA) and finally 91.60 (2021 high Feb.5).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD rises toward 1.0700 after Germany and EU PMI data
EUR/USD gains traction and rises toward 1.0700 in the European session on Monday. HCOB Composite PMI data from Germany and the Eurozone came in better than expected, providing a boost to the Euro. Focus shifts US PMI readings.
GBP/USD holds above 1.2350 after UK PMIs
GBP/USD clings to modest daily gains above 1.2350 in the European session on Tuesday. The data from the UK showed that the private sector continued to grow at an accelerating pace in April, helping Pound Sterling gather strength.
Gold price flirts with $2,300 amid receding safe-haven demand, reduced Fed rate cut bets
Gold price (XAU/USD) remains under heavy selling pressure for the second straight day on Tuesday and languishes near its lowest level in over two weeks, around the $2,300 mark heading into the European session.
Here’s why Ondo price hit new ATH amid bearish market outlook Premium
Ondo price shows no signs of slowing down after setting up an all-time high (ATH) at $1.05 on March 31. This development is likely to be followed by a correction and ATH but not necessarily in that order.
US S&P Global PMIs Preview: Economic expansion set to keep momentum in April
S&P Global Manufacturing PMI and Services PMI are both expected to come in at 52 in April’s flash estimate, highlighting an ongoing expansion in the private sector’s economic activity.