US dollar index DXY facing some downside pressure around 100.70

• The DXY index corrects lower after making recent highs above the 101.00 level.
• US yields are also pulling back from recent highs and moving defensively.
• Fed speeches and housing data stand out on the US calendar on Wednesday.

The US dollar index DXYwhich measures the strength of the dollar against a basket of major currencies, extends corrective decline to 100.70 region during the European session on Wednesday.

Limited DXY index in the region of 101.00

The DXY index is under pressure and moves into negative territory on Wednesday after four consecutive daily advances.

The corrective movement in the dollar comes amid the same negative performance in US yields due to a tepid recovery in the bond market. Additionally, yields across the curve are easing some upside momentum after hitting new cyclical highs on Tuesday.

There is no new news of the war in Ukraine, so the dollar’s decline should be somewhat contained for now.

Weekly MBA-measured mortgage applications and existing home sales figures will be released on the US economic calendar. There are also speeches scheduled by San Francisco Fed President M. Daly and Chicago Fed Governor C. Evans.

What can we expect around the USD

The rally in the DXY index, albeit briefly, broke above the 101.00 level in the first half of the week, although it came under some selling pressure afterwards. So far, dollar price action remains dictated by the prospect of a tighter Fed rate tightening and geopolitics. Furthermore, the case for a stronger dollar also remains well supported by high US yields and the strong performance of the US economy.

Relevant DXY US Dollar Index Levels

At time of writing, the DXY index is down 0.29% on the day, trading at 100.70. A break above 101.02 (19 Apr 2020 high), would open the door to 101.91 (25 Mar 2020 high) and 102.99 (20 Mar 2020 high). On the other hand, the next support appears at 99.57 (low Apr 14), followed by 97.68 (low Mar 30) and 97.15 (100-day SMA).