Dollar Index: 1-hour 50-MA is a tough nut to crack

The Dollar Index [DXY] is having a tough time holding above the 1-hour 50-MA despite the risk-on in the European equities and the improvement in the US treasury yield curve. 

The index clocked a high of 91.63 before surrendering gains to trade at 91.45. The 1-hour 50-MA stands at 91.46. 

North Korea's inaction over the weekend boosted the US dollar in Asia. However, the gains were largely due to unwinding of the USD shorts/safe haven longs initiated on Friday due to fears that North Korea may fire another missile. 

The short unwind seems to have run out of steam in Europe. Thus, the USD index has surrendered gains. 

Interestingly, the greenback is not even getting a boost from the better-than-expected China PPI number released over the weekend. An uptick in China PPI is a net positive for the global economy as it indicates the world's second largest economy is exporting inflation. 

Traders should keep an eye on the US 10-year break even inflation rate as a rise in Chinese PPI is usually followed by a pick up in inflation expectations across the globe. 

Dollar Index Technical Levels

A break below 91.25 [support on 1-hour] could yield a sell-off to 91.00 [Friday's low]. An end of the day close below the same would open doors for 90.00 [key psychological support]. On the higher side, breach of resistance at 91.63 [resistance on 4-hour chart] would open up upside towards 92.26 [4-hour 50-MA] and 92.55 [Aug 2 low].