DXY’s strong advance met resistance near 90.30 on Thursday.
Yields of the US 10-year note ease from tops near 1.70%.
Initial Claims, Philly Fed Index, Leading Index next on tap.
The greenback loses some upside momentum and recedes to the vicinity of 90.00 when gauged by the US Dollar Index (DXY) on Thursday.
US Dollar Index faces initial hurdle at 90.30
The index partially reverses Wednesday’s important advance and gradually approaches the 90.00 neighborhood, as market participants still digest the newest FOMC Minutes.
In fact, and consistent with the Minutes of the April 27-28 Fed meeting, the Committee acknowledged the positive pace of the US economic recovery and reiterated that higher inflation within the next month is thanks to base effects. However, “a number of participants” opened the door to a modification of the bond purchase program if the economy moves closer to the Fed’s targets of employment and inflation before anticipated.
In the same line, FOMC’s R.Quarles reiterated that bouts of temporary higher consumer prices are likely at an equal rate with the gradual re-opening of the economy.
The ongoing knee-jerk within the dollar comes on the rear of the move lower in US 10-year yields from Wednesday’s peaks near the key 1.70% yardstick.
Later within the US docket, the standard weekly Claims are due along side the Philly Fed index and therefore the Conference Board’s Leading Index for the month of April.
What to seem for around USD
The index has thus far met strong support within the 89.70 regions, although the Fed-led recovery seems to possess met initial resistance within the low-90.00s for the nonce . watching the broader scenario, the negative stance on the currency seems to prevail among market participants. This view has been exacerbated following April’s Payrolls, hurting at an equivalent time the sentiment surrounding the approaching full re-opening of the US economy, which is successively sustained by the unabated strength in domestic fundamentals, the solid vaccine rollout, and once more the resurgence of taper talk within the wake of the newest FOMC Minutes.
Key events within the US this week: Initial Claims, Philly Fed Index (Thursday) – Flash Manufacturing PMI, Existing Home Sales (Friday).
Eminent issues on the rear 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 cause overheat?
US Dollar Index relevant levels
Now, the index is losing 0.06% at 90.12 and faces subsequent support at 89.68 (monthly low May 19) followed by 89.20 (2021 low Jan.6) then 88.94 (monthly low March 2018). On the opposite hand, a breakout of 90.90 (weekly high May 11) would open the door to 91.07 (100-day SMA) and eventually 91.43 (monthly high May 5).
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