- DXY keeps the daily advance well in place near 91.00.
- US yields appear side-lined around the 1.65% area.
- US Core PCE rose 1.8% YoY, headline PCE up 2.3% YoY.
The greenback stays bid and flirts with the key hurdle at the 91.00 area when measured by the US Dollar Index (DXY).
US Dollar Index bid on data, month-end flows
The buying pressure remains well and sound around the dollar in the second half of the week, so far motivating the index to close the week in the positive territory for the first time after three pullbacks in a row.
Month-end flows and the offered bias in the risk complex continue to sustain the move higher in the buck, helped at the same time by the rebound in US yields.
Indeed, the recent bounce off lows in yields of the US 10-year lent support to the move higher in the dollar and put further distance from 2-month lows recorded on Thursday. Indeed, yields appreciated to the 1.70% vicinity after bottoming out around 1.53% during last week. Currently, yields remain within the consolidative theme around the 1.65% region.
In the US docket, the core PCE rose in line with forecasts 1.8% on a year to March, while headline PCE gained 2.3% from a year earlier. Further data releases saw the Personal Income expanding 21.1% MoM in March and Personal Spending gaining 4.2% on a monthly basis.
Later in the session, the Chicago PMI is due followed by the final print of the Consumer Sentiment gauged by the U-Mich index.
What to look for around USD
The April pullback in the dollar remains well and sound despite the ongoing rebound from 2-month lows in the 90.40 region. The move lower in the buck follows the broad-based retracement in US yields and the loss of enthusiasm on the US reflation/vaccine trade. Also weighing on the dollar emerges the mega-accommodative stance from the Fed (until “substantial further progress” in inflation and employment is made), and rising optimism on a strong global economic recovery, all morphing into a solid source of support for the riskier assets and a most likely driver of probable weakness in the dollar in the next months.
Key events in the US this week: Final April Consumer Sentiment.
Eminent issues on the back boiler: Biden’s plans to support infrastructure and families worth nearly $4 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
Now, the index is gaining 0.24% at 90.84 and a breakout of 91.42 (high Apr.21) would open the door to 91.66 (50-day SMA) and finally 91.97 (200-day SMA). On the other hand, the next support emerges at 90.42 (monthly low Apr.29) followed by 89.68 (monthly low Feb.25) and then 89.20 (2021 low Jan.6).
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 retreats to 1.0750, eyes on Fedspeak
EUR/USD stays under modest bearish pressure and trades at around 1.0750 on Wednesday. Hawkish comments from Fed officials help the US Dollar stay resilient and don't allow the pair to stage a rebound.
GBP/USD struggles to hold above 1.2500 ahead of Thursday's BoE event
GBP/USD stays on the back foot and trades in negative territory below 1.2500 after losing nearly 0.5% on Tuesday. The renewed US Dollar strength on hawkish Fed comments weighs on the pair as market focus shifts to the BoE's policy announcements on Thursday.
Gold fluctuates in narrow range above $2,300
Gold struggles to make a decisive move in either direction and moves sideways in a narrow channel above $2,300. The benchmark 10-year US Treasury bond yield clings to modest gains near 4.5% and limits XAU/USD's upside.
SEC vs. Ripple lawsuit sees redacted filing go public, XRP dips to $0.51
Ripple (XRP) dipped to $0.51 low on Wednesday, erasing its gains from earlier this week. The Securities and Exchange Commission (SEC) filing is now public, in its redacted version.
Softer growth, cooler inflation and rate cuts remain on the horizon
Economic growth in the US appears to be in solid shape. Although real GDP growth came in well below consensus expectations, the headline miss was mostly the result of larger-than-anticipated drags from trade and inventories.