Dollar Bull Run
USD remains on a very consecutive run to the north, with the DXY at the highest levels seen since November 2020. It is heading towards its third consecutive month in the green, having jumped some 3.5% since the worst levels at the start of 2021.
Growing expectations of a faster recovery for the U.S. economy, with the chunky incoming fiscal stimulus delivered by the U.S. President Joe Biden of $1.9 trillion. Markets players have been anticipating higher inflation given all the cash that will be distributed across the economy.
As a result, bond yields in the United States have been forced to rise with the above in mind, given the increased confidence around the economic outlook. Another helping factor came following the stronger-than-expected labour market report last Friday; a healthy amount of jobs re-added and the unemployment rate dropping down to the lowest since April 2020.
All of these fundamental factors have been contributing in pushing flows back into the reserve currency of the world, but how do things look technically?
DXY technical observations
Price action via the USD index is trading within a very critical supply zone, following a successful breakdown of key weekly resistance seen at 91.50. It was a level that had troubled the price at the start of February, forcing a big rejection with the price briefly dipping below the psychological 90.00 mark. However, much support was found again, it has proven to be a significant buying area.
Bulls must now knock down a barrier seen at 92.25, if successful breakout and retest can be completed here, then a fresh wave of upside pressure should very likely be seen. It could prove to be somewhat reminiscent of the big bull run that had commenced in April 2018.