- DXY index advances to fresh 5-year highs well above 103.00.
- US yields reverse some of Wednesday’s bounce.
- Advanced fourth quarter GDP figures and weekly jobless claims stand out on today’s economic calendar.
The US dollar index DXYwhich measures the strength of the dollar against a basket of major currencies, is moving higher and rises to an area last seen more than five years ago around 103.70 Thursday.
DXY index puts the spotlight on the data and the Fed
The DXY index advances for the sixth consecutive day on Thursday, rising nearly 4% from weekly lows in the region of 99.80 recorded on April 21.
The sharp rise in the dollar comes almost exclusively in response to a stronger conviction that the Federal Reserve will embark on a more aggressive tightening cycle starting as early as May and with a 50 basis point rate hike.
Daily gains in the dollar are seen against the backdrop of a corrective pullback in US yields across the curve, while the unchanged stance of the BoJ and the subsequent depreciation of the Japanese yen also contributes to the bullish tone in the DXY.
Turning to the US data, advanced Q4 GDP figures and weekly jobless claims stand out on today’s economic calendar.
What can we expect around the USD
The DXY index is accelerating and breaks the key 103.00 barrier convincingly for the first time since January 2017. Persistent risk aversion, geopolitics and a rebound in US yields all contribute to the dollar’s bullish momentum. Meanwhile, the likelihood of a more aggressive tightening of the Fed’s monetary conditions remains the main driver behind the strong upward movement of the DXY index in recent days, which also remains well supported by the strong performance of the US economy.
Relevant DXY US Dollar Index Levels
At time of writing, the DXY index is up 0.18% on the day, quoting at 103.69 (28 Apr 2022 high), would open the door at 103.82 (3 Jan 2017 high) and 104.00 (round level) . On the other hand, next support appears at 99.81 (21 Apr low), followed by 99.57 (14 Apr low) and 97.68 (30 Mar low).
Source: Fx Street
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