US Dollar Index clings to gains above 91.00

• DXY adds to Tuesday’s advance above the 91.00 level.
• US 10-year yields look consolidative around the 1.55% region.
• MBA Mortgage Applications, EIA report next in the calendar.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, trades slightly into the positive territory around the 91.20 zone.

US Dollar Index looks to risk trends, yields

The index adds to Tuesday’s gains and looks to extend the rebound following recent lows in the sub-91.00 region, area last visited in early March.

Furthermore, the recovery in the dollar came in tandem with the bounce off yields of the US 10-year reference to the vicinity of 1.63%, although the move lacked follow through eventually.

In the meantime, the economic recovery outside the US continues to bolster the sentiment in the risk complex, which is in turn propped up by the improved pace of the vaccine rollout in the Old Continent.

In the US calendar, weekly MBA Mortgage Applications are due seconded by the usual report on US crude oil supplies by the EIA.

What to look for around USD

The dollar manages to regain some composure and bounces off sub-91.00 levels, always amidst the renewed soft note in US yields and the loss of enthusiasm on the US reflation/vaccine trade. Also weighing on the buck emerges the mega-accommodative stance from the Fed (until “substantial further progress” in inflation and employment is made) and hopes of a strong global economic recovery, all morphing into a source of support for the risk complex and a most likely driver of probable weakness in the dollar in the second half of the year.

Key events in the US this week: Initial Claims, CB Leading Index, Biden’s virtual Climate Summit (Thursday) - Flash Markit Manufacturing PMI (Friday).

Eminent issues on the back boiler: Biden’s new stimulus bill worth around $3 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

At the moment, the index is gaining 0.02% at 91.22 and a break above 91.62 (50-day SMA) would open the door to 92.13 (200-day SMA) and finally 93.43 (2021 high Mar.31). On the other hand, the next support emerges at 90.85 (weekly low Apr.20) ahead of 89.68 (monthly low Feb.25) and then 89.20 (2021 low Jan.6).