US Dollar Index picks up bids towards 94.00 as US Treasury yields rebound

• DXY extends Monday’s gains, the biggest in two weeks.
• Markets turn sluggish ahead of the key US GDP, Treasury yields snap two-day fall.
• Second-tier US data, risk catalysts eyed ahead of crucial weekly data/events.

US Dollar Index (DXY) keeps the previous day’s advances, up 0.06% on a day near 93.90 during early Tuesday. The greenback gauge refreshed monthly low the previous day before posting the heaviest daily gains since October 11.

While mixed sentiment concerning the US Federal Reserve’s (Fed) next moves and US stimulus seemed to have underpinned the DXY’s run-up the previous day, the US Treasury yields’ consolidation of recent losses favors the latest upside. That said, the US 10-year Treasury yields snap two-day downturn near 1.64% by the press time.

Risk appetite improved the previous day as comments from US President Joe Biden and House Speaker Nancy Pelosi propelled stimulus hopes. Also adding to the risk-on mood were positive headlines from China’s Evergrande and Tesla fresh record high, which fuelled Wall Street benchmarks and commodities.

Even so, hawkish Fedspeak and a blackout period preceding the advance estimation of US Q3 GDP probe the optimists and direct the cautious traders toward the greenback. Also confusing the investors were mixed US data. The Dallas Fed Manufacturing Business Index rose past market consensus and prior readings in October but the Chicago Fed National Activity Index turned negative, -0.13 versus +0.05 previous readouts.

Moving on, US housing data, Consumer Confidence and Richmond Manufacturing Index may entertain the traders but major attention will be given to the US stimulus and GDP news.

Technical analysis

DXY’s ability to regain past 10-DMA after two weeks suggests the quote’s further upside towards the 21-DMA hurdle surrounding the 94.00 threshold. Meanwhile, US Dollar Index bears need to wait for a clear downside break of 93.50 for fresh entries.