US Dollar Index pushes higher to new tops near 93.20

  • DXY extends the rally further north of the 93.00 mark.
  • US 10-year yields rebound to the area above 1.20%.
  • MBA Mortgage Applications, EIA’s weekly report next on tap.

The sentiment around the dollar stays anything but abated for yet another session and pushes the US Dollar Index (DXY) to new 3-month peaks near 93.20 on Wednesday.

US Dollar Index supported by risk aversion

The index adds to the ongoing advance and posts gains for the fifth session in a row on Wednesday, always on the back of the perseverant risk aversion and amidst a mild pick-up in US yields.

In fact, coronavirus concerns exclusively stemming from the spread of the Delta variant continue to pose a threat to the global growth prospects and lend extra wings to the safe havens.

In addition, yields of the key US 10-year note seem to have met some contention in sub-1.15% levels on Tuesday and now regain the 1.20% yardstick and beyond, lending at the same time further legs to the buck.

In the US data space, weekly MBA’s Mortgage Applications are due in the first turn seconded by the EIA’s report on the US crude oil supplies during last week.

What to look for around USD

The recovery in DXY already surpassed the key 93.00 barrier and goes for the so far 2021 highs in the 93.50 area. The positive move in the index is mainly sustained by the resumption of the risk aversion following the resurgence of coronavirus concerns. The positive stance in the dollar, in the meantime, remains propped up by the solid pace of the economic recovery, higher-than-expected inflation figures and rising rumours of rate hikes/QE tapering earlier than anticipated.

Key events in the US this week: MBA Mortgage Applications (Wednesday) – Initial Claims, Existing Home Sales (Thursday) – Flash July Manufacturing/Services PMI (Friday).

Eminent issues on the back boiler: Biden’s multi-billion plan to support infrastructure and families. 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 0.21% at 93.16 and a breakout of 93.43 (2021 high Mar.21) would open the door to 94.00 (round level) and finally 94.30 (monthly high Nov.4). On the other hand, the next down barrier lines up at 92.46 (23.6% Fibo of the November-January rally) followed by 92.00 (monthly low Jul.6) and then 91.51 (weekly low Jun.23).

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