The USD index reached fresh 2021 peaks around 92.60 where the ket 100-day SMA arrives

On Tuesday, Federal Reserve Chair Jerome Powell signaled that inflation was under control, and the U.S. central bank wouldn’t raise interest rates until the global pandemic subsides and the U.S. economy is in the clear. However, his comments failed to calm investors rattled by coronavirus fears amid the renewed lockdowns and restrictions in Europe and rising cases globally. 

Now, when Europe faces the third wave of the pandemic, investor focus is back on the virus-related developments that hurt the already fragile economic recovery. Against this backdrop, stocks are falling across the globe on Wednesday while the safe-haven dollar rallies versus high-yielding counterparts. Adding to the negative tone in the global financial markets, oil prices fell 6% on Tuesday while recovery attempts are looking modest so far. 

As such, investors ignored upbeat economic data out of Germany where both manufacturing and services PMIs came in better than expected. Following the report, the euro bounced from four-month lows but stayed on the defensive marginally above the 1.1800 figure that could be derailed for the first time since November if risk-off trends continue to dominate the markets. Furthermore, the EURUSD pair will likely stay under the selling pressure in the coming weeks amid fresh lockdowns across the Eurozone.

In recent trading, the USD index reached fresh 2021 peaks around 92.60 where the key 200-day SMA arrives. Meanwhile, yields of the key US 10-year Treasuries bounce off weekly lows in sub-1.60% levels and regained the 1.62% handle during the European hours. A breakout of 92.60 would expose 94.30 eventually.

Later today, Chairman Powell will testify before the Committee on Banking, Housing and Urban Affairs. On the data front, durable goods orders for the month of February and March’s advanced PMIs could affect short-term dynamics in USD pairs.


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