US Dollar Index remains under pressure near 90.20

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, stays depressed in the lower end of the recent range near 90.20.

US Dollar Index supported by the 90.00 zone

The index manages to keep business above the key 90.00 yardstick for the time being, always against the backdrop of the perseverant selling bias in the dollar, somewhat higher US yields and the still sour aftertaste among investors following the April’s Payrolls figures.

Indeed, Friday’s horrible prints from the US labour market report appear to still be weighing on traders’ sentiment and seem to have further undermined the US economic outperformance narrative and lent extra support to the ongoing accommodative stance in the monetary conditions.

In the US data space, the NFIB Index is due in first turn seconded by the JOLTs Job Openings and the weekly report by the API on US crude oil inventories.

In addition, NY Fed J.Williams (permanent voter, centrist), FOMC Governor L.Brainard (permanent voter, dovish), San Francisco Fed M.Daly (voter, centrist), Atlanta Fed R.Bostic (voter, centrist) and Philly Fed P.Harker (2023 voter, hawkish) are all due to speak throughout the session.

What to look for around USD

The index came under extra downside pressure and another visit to the 90.00 support and probably below appears to be gaining some thought among investors. The renewed negative stance on the dollar has been exacerbated following April’s NFP, hurting at the same time the sentiment surrounding the imminent full re-opening of the US economy, which is in turn sustained by the unabated strength in domestic fundamentals, the solid vaccine rollout and once again the resurgence of the market chatter regarding an anticipated tapering. The latter comes in despite Fed’s efforts to talk down this scenario, at least for the next months.

Key events in the US this week: April CPI, Core CPI (Wednesday) - Initial Claims (Thursday) – Retail Sales, Industrial Production, flash May Consumer Sentiment (Friday).

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 losing 0.01% at 90.27 and faces immediate contention at 90.04 (monthly low May 10) followed by 89.68 (monthly low Feb.25) and then 89.20 (2021 low Jan.6). On the upside, a breakout of 91.06 (100-day SMA) would open the door to 91.43 (weekly/monthly high May 5) and finally 91.72 (50-day SMA).