The US Dollar Index bounces off the lows and looks to recover 96.00

  • DXY drops as low as the 95.80 region on Monday.
  • Consolidation remains the name of the game around US yields.
  • The ADP report surprised on the downside in January.

The greenback remains on the defensive despite managing to bounce off daily lows near 95.80 as measured by the US Dollar Index (DXY).

The US Dollar Index remains supported near 95.80

After fresh multi-day lows around 95.80, the index has now regained some composure and is looking to recover the key 96.00 zone amid US yields remaining depressed amid the broader chart.

The rebound in the dollar came shortly after the ADP report showed that the US private sector had lost 301,000 jobs over the past month, missing the consensus although matching earlier speculation that the labor market may have suffered. the impact of the rapid spread of the omicron variant over the past few weeks. The decline in ADP printing was the largest since April 2020, the start of the pandemic.

What to look for around the USD

The downward correction in the Dollar remains firmly in place, although decent support appears to have been established around 95.80. The reasons for the strong dollar correction can be found in the improving mood in the risk associated universe and dormant US yields (despite navigating to the upper end of the recent range). However, the constructive outlook for the greenback is likely to remain unchanged longer term due to rising yields, continued high inflation, support from Fedspeak and the steady pace of the US economic recovery.

Key events in the United States this week🙂 ADP Employment Change (Wednesday) – Initial Unemployment Claims, ISM Non-Manufacturing PMI, Factory Orders (Thursday) – Nonfarm Payrolls, Unemployment Rate (Friday).

Significant problems on the rear boiler: trajectory of the Fed’s rates this year. Trade conflict between the United States and China under the Biden administration. Debt ceiling issues. Escalation of geopolitical effervescence in the face of Russia and China.

Relevant US Dollar Index Levels

Now the index is down 0.30% to 95.97 and a break above 97.44 (January 28, 2022 high) would open the door to 97.80 (June 30, 2020 high) and finally to 98.00 (round level). On the other hand, the next downside barrier emerges at 95.80 (2nd Feb weekly low) followed by 95.41 (20th Jan low) then 94.62 (14th Jan 2022 low) .

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