- Summary:
- The USD Index retains bullish bias after a series of risk-averse events on the day, but for how long can this hold before the bears come calling?
The USD Index is off intraday highs, but still retains some gains for the day. This price picture is a consequence of the drop in US long-term bond yields after the US market open, eroding earlier gains made in the London session. The controversy with the AstraZeneca vaccine in Europe, leading to the cessation of vaccinations in several European countries, is the big news of the day. This has created a level of risk aversion in the financial markets, providing support for the greenback against a host of risky currencies.
The USD Index is trading at 91.822, a gain of 0.16% on the day.
Technical Levels to Watch
The daily chart shows a rising wedge in formation, preceded by the downtrend move of September 2020 to January 2021.
The upside in the USD Index can be considered a corrective pullback, with a resumption of the initial trend to be precipitated by the breakdown of the wedge. This move would probably have a projected price objective of 89.307 but would encounter several pitstops at 91.806, 91.165 and 90.012.
On the flip side, an extension of the recovery move of the DXY would stem from a bounce on 91.806, targeting the wedge’s upper border and the 92.736 resistance (mid-September 2020 lows in role reversal). If this resistance is uncapped, we could see price activity towards 93.088, with additional targets at 93.857 and 94.787.
USD Index Daily Chart
