US Dollar Index remains firm around 90.60 post-data

The US Dollar Index (DXY), which gauges the buck vs. a basket of its main rivals, keeps the bid tone unchanged around 90.60 on Friday.

US Dollar Index meets daily resistance near 90.80

The index reverses Thursday’s losses and advances well above 90.00 the figure on the back of the strong rebound in yields of the US 10-year benchmark.

In fact, the move to levels last seen around a year ago in yields of the 10-year Treasuries sustained the strong comeback in the index from sub-90.00 levels on Thursday and allowed for the move to multi-day peaks in the 90.75/80 band on Friday.

In the docket, US inflation gauged by the headline PCE and Core PCE rose at a monthly 0.3% in January and 1.5% from a year earlier. Additional data saw the advanced trade deficit expected at $83.74 billion during last month while Personal Income expanded 10.0% MoM in the first month of the year and Personal Spending expanded 2.4% inter-month.

Closing the calendar will come the final Consumer Sentiment gauge measured by the U-Mich index.

What to look for around USD

The index manages to retake the 90.00 yardstick and well above following multi-week lows near 89.70 on Thursday. The reversion of the weekly drop came in tandem with the strong bounce of yields to levels last recorded a year ago. While the reflation/vaccine trade continues to keep bullish attempts in the buck contained, bouts of concerns regarding a pick-up in inflation (and inflation expectations) stemming from the expected extra fiscal stimulus could provide some pockets of strength in the dollar for the time being. Against this, occasional upside in the buck should remain short-lived amidst the broad-based bearish outlook for the currency in the medium/longer-term. This, in turn, is propped up by the reinforced mega-accommodative stance from the Fed until “substantial further progress” is seen, persistent chatter of extra fiscal stimulus and prospects of a strong recovery in the global economy, which are all seen underpinning the better sentiment in the risk complex.

Key events in the US this week: PCE figures and the final February U-Mich print are all due on 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 gaining 0.47% at 90.55 and a breakout of 90.77 (weekly Feb.26) would open the door to 91.05 (weekly high Feb.17) and finally 91.60 (2021 high Feb.5). On the other hand, the next support emerges at 89.68 (weekly low Feb.25) seconded by 89.20 (2021 low Jan.6) and then 88.94 (monthly low March 2018).