The US Dollar Index (DXY) appears to have overcome recent weakness that followed the rejection at 92.50 and posted gains this Friday after US long-term bond yields turned northwards.
US bond yields, especially the yield on the 10-year Treasury note, added nearly 3.6% this Friday to restore the upside on that asset. This has generated fresh demand on the US Dollar, allowing the USD Index to gain 0.5% as of the time of writing.
The USD demand got a slight push from the Core Producer Price Index (monthly), which rose 0.5% in February to beat market expectations of a 0.4% climb. The University of Michigan survey of consumer confidence could add more fillip to the USD index if the numbers exceed market expectations.
Recall that Core Consumer Price Index grew by 0.4% in February, but was less than the market expectation of 0.5%, causing bond yields to recede and the USD Index to retrace from highs at 92.50.
Technical Levels to Watch
Following the bearish engulfing candle at 92.50 and subsequent retracement, Friday’s candle shows the recovery bounce from 91.50. The active daily candle’s ascent has met resistance at 91.906. The price needs to uncap this resistance level to bring 92.50 back into the picture. Clearance of this level to the upside allows for a potential move to 92.803, with 93.173 serving as an additional target.
On the other hand, rejection and pullback from the 91.906 resistance could bring 91.500 into the picture. Additional downside targets are located at 91.261, 90.965 and 90.503. These targets need to be taken out by bears if they are to target the channel’s downside barrier.
USD Index (DXY) Daily Chart