USD Index: DXY Set for Further Upside Towards 92.00 On Rising Bond Yields

Summary:

The CFTC Positioning Report indicates that gross longs on the USD have increased, which could have bullish implications for USD Index (DXY).

The latest CFTC Positioning Report shows that speculators added to the number of existing gross long positions for the 5th week in a row, which sends the USD net positions into positive territory. This is a reflection of the strength that the greenback has picked up as long-term bond yields rise, in anticipation of a faster recovery in the US economy.

Also supporting the US Dollar on the day are comments by the Richmond Fed President Thomas Barkin, who said that the rise in bond yield was “a good thing”. This opinion mirrors the attitude of the Fed which has so far, opted not to do anything to curtail the bond yields.

Technical Outlook for USD Index

The price pattern on the daily chart is that of a double bottom, with price now testing the neckline at the 91.906 price level. A break of this price level targets the 92.50 resistance, which completes the price projection point from the neckline break. Continued advance takes the DXY to 92.803 and 93.173.

On the other hand, a breakdown of the 91.50 support allows 91.261 to come into the picture. This move negates the double bottom and opens the pathway towards 90.965 and potentially 90.503.