- The DXY index extends Wednesday’s advance and approaches the 99.00 level.
- US yields resume gains, supported by speculation about aggressive Fed tightening.
- Durable Goods Orders, Weekly Jobless Claims and Preliminary PMIs stand out on today’s economic calendar.
The US dollar index DXYwhich measures the strength of the dollar against a basket of major currencies, holds firm near the key barrier at the 99.00 level.
DXY Index Focuses on Data, Ukraine and Yields
The DXY index up for the second day in a row so far Thursday. The upward bias of the dollar continues supported by resumption of the uptrend in US yields through the curve and firmer prospects for faster and tighter normalization by the Federal Reserveall accompanied by persistent geopolitical concerns.
The probability of a 50 basis point interest rate hike at the May meeting is now around 68%more than double the probability of just a week ago, according to the CME Group’s FedWatch tool.
Yields, meanwhile, continue their flattening process after the 2-year bond retests the 2.15% area and the 10-year bond hovers around the 2.35% region.
Turning to the US data, Markit will release preliminary PMIs for the manufacturing and services sector for the current month. In addition, initial jobless claims, durable goods orders, and speeches by R. Waller of the FOMC, C. Evans of the Chicago Fed, and R. Bostic of the Atlanta Fed will also be released.
What can we expect around the USD
The weekly recovery of the DXY index has approached the 99.00 level at the moment. Concerns about the geopolitical landscape further increase demand for the dollar, combined with a cautious stance on the complex associated with risk. Looking at the bigger picture, risk aversion, emanating exclusively from Ukraine, should underpin purchases in safe-haven assets and support the US dollar at a time when constructive prospects continue to be supported by the current narrative of low inflation. high, a possible more aggressive Fed tightening stance and the strong performance of the US economy.
Relevant DXY US Dollar Index Levels
At time of writing, the DXY index is up 0.11% on the day, trading at 98.71. A break above 98.96 (22 Mar high), would open the door to 99.29 (14 Mar high) and finally 99.41 (7 Mar high). On the other hand, next support appears at 97.72 (March 17 low), followed by 97.71 (March 10 low) and 97.44 (Jan 28 high). Relevant US Dollar Index Levels
Source: Fx Street
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