The US Dollar Index continues to see strength, coming off the back of weakness in the EURUSD, GBPUSD and USDJPY pairs. Weakness in silver on Tuesday is also fuelling demand on the greenback.
The performance of the USD Index is surprising. Global stocks, crude oil and other risky assets are all bullish, and the latest moves on additional stimulus from US Democrats are all factors that should cause a weakening on the US Dollar.
Perhaps, the stellar ISM Manufacturing Index data and weakness in the Euro, Pound, Peso and other currencies that are paired with the greenback may have a hand in the bullishness of the DXY.
Also, the Reserve Bank of Australia extended its QE program, weakening the risk-correlated Aussie Dollar.
The USD Index has thus gained 0.28% on the day.
Technical Levels to Watch
Today’s move aims to extend yesterday’s violation of the 90.965 resistance level, thus consolidating the march above the 91.00 mark. If the active daily candle achieves this closing penetration, then the breakout is confirmed and the pathway towards the next resistance at 91.906 is blown wide open. Above this level, 92.50 and 93.173 form additional upside targets.
On the flip side, a collapse of USD strength could put the 90.965 support level at risk. A breakdown of this price level challenges the ascending support trendline, which in effect is the lower border of an ascending triangle. 89.471 is a likely target if the trendline collapses. We could also see a further dip towards 89.189, which was a low last seen on 6 January.
USD Index; Daily Chart