US Dollar Index advances to daily highs around 91.30

  • DXY leaves behind Monday’s pullback and regains the smile.
  • US 10-year yields meet contention in the 1.60% region so far.
  • Factory Orders, Balance of Trade, IBD/TIPP Index next in the docket.

The greenback, in terms of the US Dollar Index (DXY), regains upside traction and manages to clinch session peaks in the 91.30 area on turnaround Tuesday.

US Dollar Index looks to risk trends, data

The index resumes the upside following the moderate daily pullback recorded at the beginning of the week and retakes the 91.00 mark and beyond, flirting at the same time with weekly highs and the 20-day SMA.

In the meantime, the US economic rebound narrative seems to have re-emerged among investors and keeps sustaining the better mood in the buck despite US yields continue to trade within a side-lined theme.

At his speech on Monday at a conference of the National Community Reinvestment Coalition, Chairman Powell said the economy is “not out of the woods yet”, although it continues to reopen and collaborating with the “stronger economic activity and job creation”.

Later in the US data space, March’s Factory Orders are due seconded by Balance of Trade figures, the IBD/TIPP Index and the weekly report by the API on US crude oil supplies.

What to look for around USD

The sharp April pullback in the dollar seems to have met decent contention in the 90.40 region (April 29), staging quite a strong rebound well past the 91.00 mark in the following sessions. The optimism regarding the imminent full re-opening of the US economy has been gathering further traction as of late, propped up at the same time 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: Factory Orders (Tuesday) – ADP Report, ISM Non-Manufacturing (Wednesday) – Initial Claims (Thursday) – Nonfarm Payrolls, Unemployment Rate (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 gaining 0.39% at 91.32 and a breakout of 91.42 (high Apr.21) would open the door to 91.72 (50-day SMA) and finally 91.95 (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).