- DXY meets support in the 91.50 area on Thursday.
- Advanced Retail Sales crushed estimates in March.
- Initial Claims dropped to multi-month lows last week.
The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main competitors, looks to rebound from recent lows in the 91.50 zone.
US Dollar Index ignores data
After bottoming out in the 91.50 region, or new 4-week lows, the index now manages to pick up some upside impulse amidst the broad-based consolidative mood and lower yields, all despite recent solid US data results.
In fact, yields of the US 10-year note slipped back below the 1.60% level on Thursday in spite of better-than-expected results from key US fundamentals.
That said, the buck failed to gather steam after advanced headline Retail Sales expanded 9.8% MoM in March, while Core sales rose 8.4%. in addition, weekly Claims rose by 576K – the lowest level in a year – and the Philly Fed rose to 50.2 for the current month. Same path followed the NY Empite State index, improving to 26.3 in the same period.
On the not-so-bright side, both Industrial and Manufacturing Production expanded below estimates at a monthly 1.4% and 2.7%, respectively, during last month.
Later in the NA session, Busine Inventories, the NAHB Index and TIC Flows will close the calendar followed by speeches by Atlanta Fed R.Bostic (voter, centrist), San Francisco Fed M.Daly (voter, centrist) and Cleveland Fed L.Mester (2022 voter, hawkish).
What to look for around USD
The dollar breached the 92.00 support and extended the leg lower to the 91.50 area so far. This view is supported by the retracement in US yields and the loss of enthusiasm on the US reflation/vaccine trade. Furthermore, 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 (now postponed to later in the year) remain a source of support for the risk complex and carry the potential to undermine further the dollar’s momentum in the second half of the year.
Key events in the US this week: Housing Starts, Building Permits, advanced Consumer Sentiment (Friday).
Eminent issues on the back boiler: Biden’s new stimulus 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? Future of the Republican party post-Trump acquittal.
US Dollar Index relevant levels
At the moment, the index is gaining 0.03% at 91.66 and a break above 92.23 (200-day SMA) would open the door to 93.43 (2021 high Mar.31) and finally 94.30 (monthly high Nov.4). On the downside, the next support is located at 91.49 (monthly low Apr.15) followed by 91.30 (weekly low Mar.18) and then 91.03 (100-day SMA).
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 stays below 1.0700 ahead of US data
EUR/USD stays in a consolidation phase slightly below 1.0700 in the European session on Wednesday. Upbeat IFO sentiment data from Germany helps the Euro hold its ground as market focus shifts to US Durable Goods Orders data.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold manages to hold above $2,300
Gold struggles to stage a rebound following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% ahead of US data, not allowing XAU/USD to gain traction.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.