US Dollar Stays Strong Following In-Line Markit PMI Report

US DOLLAR OUTLOOK: USD PRICE ACTION STILL STRONG FOLLOWING IN-LINE PMI REPORT

US Dollar continues to trade on its front foot after the release of monthly PMI data
IHS Markit report for March shows US services business activity at an 80-month high
DXY Index trending upward as higher lows take form and EUR/USD price action slides
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The US Dollar is trading broadly higher so far today with the DXY Index up nearly 0.25% shortly after the New York opening bell. Markets are currently digesting the latest round of preliminary PMI data for March 2021 just released by IHS Markit. The US PMI report crossed the wires largely in-line with forecasts and led to a relatively muted reaction across USD price action.

US DOLLAR INDEX PRICE CHART WITH TEN-YEAR TREASURY YIELD OVERLAID: 15-MINUTE TIME FRAME (24 MARCH 2021 INTRADAY)

Chart by @RichDvorakFX created using TradingView

The headline composite PMI figure came in at 59.1, which is a slight decline from the prior 59.5 reading. That said, the flash US PMI report detailed that the services business activity component rose to its highest level in 80-months. Manufacturing output was said to be constrained due to ‘extensive supply shortages,’ but goods producers also noted the sharpest uptick in new orders since June 2014. The US Dollar saw a slight boost in immediate reaction to the PMI data while the ten-year Treasury yield dipped a bit to 164-basis points.

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IHS MARKIT PMI REPORT – EUROZONE VS UNITED STATES COMPOSITE DATA (MARCH 2021)

Overall solid US PMI data is following suit of better-than-expected Eurozone PMI report released earlier this morning. That said, with the Euro-area battling its third wave of covid and weathering extended lockdown measures, in addition to another massive US fiscal stimulus package hitting the system, it is likely that EUR/USD remains under pressure. Seeing that EUR/USD price action is the largest component of the DXY Index by far with a 57.6% weighting, this could keep propelling the broader US Dollar higher.