KEY POINTS OF THE ARTICLE ON THE COURSE OF THE DXY:

• The dollar under pressure in the face of deteriorating public accounts
• Improving global economic outlook also hurts greenback
• The DXY pushes the symbolic support of the 90 points

THE DOLLAR UNDER PRESSURE IN THE FACE OF DETERIORATING PUBLIC ACCOUNTS

The greenback continues its slide in this first session of the year. The dollar underperformed all major currencies to the point of posting a nearly 3-year low of 89.44 points this morning.

The dollar is under pressure in the face of deteriorating public accounts. The new $900 billion stimulus package ratified by the US president last week will push up US debt even further, which is expected to peak at around 130% of its GDP in 2020.

Concerns about US debt thus take precedence over the benefits of the stimulus package. Investors are increasingly doubtful of the ability of the United States to repay its debts. The situation is also worrying in Europe, especially in the countries of the South, but the debt remains much lower than that of the United States at the EU level (thanks to the lower indebtedness of the countries of the North).

IMPROVING GLOBAL ECONOMIC OUTLOOK ALSO HURTS GREENBACK

The dollar has also been suffering from the improvement in the global economic outlook for several weeks. The economic outlook for 2021 has been revised upwards thanks to the conclusive results of several covid vaccines. No one anticipated vaccines so early, which will allow a faster and more sustainable recovery of the global economy during 2021. The faster vaccine production and distribution is, the better the global economic outlook and therefore the more pressure safe havens such as the dollar will be under.

In the shorter term, the outlook for the dollar will depend mainly on numerous economic publications. Currency traders will take note this week of the PMI indices, the ISM indices, the ADP survey or the monthly us employment report (the famous NFP).

THE DXY PUSHES THE SYMBOLIC SUPPORT OF THE 90 POINTS

In terms of technical analysis, we can see the DXY having pushed the symbolic support of 90 points at the end of December. The sinking of this support is a signal in favor of a continuation of the underlying downtrend since it shows that the sellers of the dollar still have the hand.

The next medium to watch will be the 2018 low at around 88.25 points. As in 2018, buyers of the dollar could regain control towards this price level. If this is not the case and the DXY pushes this support, the bearish outlook will be maintained. The next medium to watch would then be the highs of 2012 and 2013 (exceeded in 2014) at about 85 points.