US Dollar Index keeps the bid bias unchanged around 93.00
- DXY trades in the area of recent tops in the 93.00 neighbourhood.
- Risk aversion persists on renewed COVID-19 fears on Tuesday.
- US housing data, API’s weekly report next in the calendar.
The greenback, when tracked by the US Dollar Index (DXY), extends the recovery and looks to advance further north of the 93.00 yardstick.
US Dollar Index bid on rising risk aversion
The index navigates in the region of 3-month peaks around the 93.00 mark, always oon the back of the perseverant risk aversion and declining US yields.
In fact, the rapid and unexpected spread of the Delta variant of the coronavirus lent extra legs to the risk aversion and continues to weigh on investors’ sentiment, threatening at the same time to impact on the global growth prospects.
By the same token, yields of the key US 10-year benchmark keep the march south unabated and already trade in levels last seen in February around the 1.20% zone.
Later in the docket, Housing Starts and Building Permits will take centre stage seconded by the usual weekly report on US crude oil inventories by the API.
What to look for around USD
The recovery in DXY already reached the key 93.00 barrier, mainly sustained by the resumption of the risk aversion on the resurgence of coronavirus concerns. The positive stance in the index, in the meantime, remains underpinned by the solid pace of the economic recovery, higher-than-expected inflation figures and rising rumours of rate hikes/QE tapering earlier than anticipated.
Key events in the US this week: Building Permits, Housing Starts (Tuesday) – MBA Mortgage Applications (Wednesday) – Initial Claims, Existing Home Sales (Thursday) – Flash July Manufacturing/Services PMI (Friday).
Eminent issues on the back boiler: Biden’s multi-billion plan to support infrastructure and families. 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 0.19% at 93.01 and a breakout of 93.43 (2021 high Mar.21) would open the door to 94.00 (round level) and finally 94.30 (monthly high Nov.4). On the other hand, the next down barrier lines up at 92.46 (23.6% Fibo of the November-January rally) followed by 92.00 (monthly low Jul.6) and then 91.51 (weekly low Jun.23).