US Dollar Index refreshes 20-year high on Ukraine-Russia woes, firmer yields, focus on Fed’s Powell

• US Dollar Index renews the multi-day top, extends Friday’s gains.
• Fears emanating from Russia join hawkish Fedspeak and downbeat EU concerns to propel DXY.
• Geopolitical updates, Fed Chairman Jerome Powell’s speech will be crucial for fresh impulse.
• Bulls are likely to keep the reins amid risk-aversion, Fed’s rate hike concerns.

US Dollar Index (DXY) remains on the front foot around 113.80, after renewing the 20-year top near 114.70, as risk-aversion intensifies on early Monday. In addition to the sour sentiment, hawkish comments from the Fed policymakers also favor the US dollar.

Fed Chairman Jerome Powell said on Friday, “We are committed to using our tools.” Following him, Fed Vice Chair Lael Brainard mentioned that inflation is very high and is hitting low-income families ‘hard’. During the weekend, Atlanta Federal Reserve President Raphael Bostic said that he still believes the central bank can tame inflation without substantial job losses given the economy's continued momentum, reported Reuters while quoting the Fed policymaker’s interview on CBS' "Face the Nation".

As per the latest readings of the US S&P Global PMIs for August, published on Friday, the Manufacturing gauge rose to 51.8 from 51.5, while its services counterpart recovered from 44.6 to 49.3 for September.

On a different page, Ukraine President Zelenskiy was last heard saying that maybe ''Putin's nuclear threats were a bluff, but now, it could be a reality'' as per a CBS interview. Meanwhile, the United States warned of "catastrophic consequences" if Moscow were to use nuclear weapons in Ukraine after Russia's Foreign Minister said regions holding widely-criticized referendums would get full protection if annexed by Moscow.

The risk-off mood drowned Wall Street and the yields favored the US dollar to remain firmer, amid the hawkish Fedspeak and rate hike. That said, the S&P 500 Futures print mild losses while the US 10-year Treasury yields add four basis points to 3.74% at the latest.

Looking forward, risk aversion can help the US dollar gauge to remain firmer against major currencies. However, Fed Chair Powell’s speeches and the US Durable Goods Orders, are important catalysts to watch for clear directions.

Technical analysis

A daily closing beyond 114.00, comprising an upward sloping resistance line from May, becomes necessary for the DXY bulls to keep reins. However, overbought RSI (14) challenges the greenback buyers.