Related Post
The US dollar index (DXY) is down for the sixth consecutive day as forex investors react to the recent streak of weak US economic numbers. The index is trading at $90.42, which is the lowest level since January 27.
Weak US economic numbers
The US has been one of the worst-hit countries by the coronavirus pandemic. The country has confirmed more than 27 million cases and 471K deaths. As a result, the economy contracted by 3.5% in 2020, the lowest contraction in decades.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
The weak performance of the US economy has continued this year. Last week, data by the Bureau of Labour Statistics (BLS) revealed that the economy added just 40,000 jobs in January after shedding 140,000 jobs in the previous month. These numbers were weaker than what most analysts were expecting.
And yesterday, data by the statistics department showed that the country’s inflation was relatively mild. The core consumer price index was flat, missing the median estimates of a 0.2% increase. The headline consumer price index rose by 1.4% in the past 12 months, a lower figure than the previous 1.6%.
These numbers are now putting pressure on Congress and the Biden administration to fast-track a $1.9 trillion stimulus package. This package will provide financial support to businesses, households, and states and local governments.
Still, some analysts believe that more fiscal help is not necessary because some of the funds allocated in the previous $900 billion package has not been spent. Also, there are signs that all this stimulus will spur inflation in the final half of the year.
eToro:
visit & create account
US dollar index technical outlook
The four-hour chart shows that the US dollar index has been on a steady downward trend since Friday when it was trading at $91.60. The index has also moved below the 25-day moving average and the Ichimoku cloud. It has also dropped below the important support at $90.26. Notably, the DXY has also formed a bearish pennant pattern that is shown in pink. Therefore, it will likely break-out lower as bears target the next support at $90.00.
