USD Bull Run
The greenback remains well within the control of the market bulls, seeing another solid performance for the month. March saw the USD posting its biggest monthly advance since July 2019, as momentum to the upside picked up pace. It is the most consecutive run of monthly gains observed since the early 2020.
There are certainly stronger arguments now that this USD move is more than just a correction, with some institutional players starting to change their tone. The case is there that this is a new trend, given the solid push already observed. In terms of the US Dollar Index it has now gained some 4.50%, trading back to the highest levels seen in some five months.
Rosy U.S. economic picture
Things are really looking promising around the U.S. economy and USD. The run of strong data cements the USD’s unbeatable growth rebound credentials. Last week, Friday’s data showed U.S. nonfarm payrolls surged 916,000 jobs, the largest gain since last August. Data for February was revised higher to show 468,000 jobs created instead of the previously reported 379,000. General forecasts were for payrolls increasing by 647,000 jobs in March. The unemployment rate also dropped down to 6.0% from 6.2%, the lowest since April 2020.
Elsewhere, the United States this week reported stronger Services PMI data, coming in at 63.7 versus expected 58.3 (previous 55.3). It managed to surge to the highest in the survey's history, with strong growth for the new orders coming in.
All of this on top of the promising economic outlook spurred by U.S. President Joe Biden’s plans for $2.3 trillion in infrastructure spending and the accelerating rollout of COVID-19 vaccines.
All of the above is still very much supportive of USD, encouraging flows to keep coming into the world’s largest economy.
Technical observation DXY
As detailed in the prior USD articles the DXY was trading at a critical area, which was reminiscent of 2018. A needed technical breakout and retest of the 99.25-50 region is very much supportive for further bull momentum. Price action in the latest week has cooled to somewhat retest the noted region, following some needed consolidation. The door has been left open for the bulls to capitalize on for greater upside momentum. The next major region insight would be 94.50, which would see the dollar’s peers further losing ground.