US Dollar Index drops further, challenges multi-day lows near 99.60 ahead of data

• DXY adds to Wednesday’s losses below the 100.00 mark.
• US yields extend the corrective downside from recent tops.
• Retail Sales, Initial Claims, U-Mich Index next of tap in the docket.

The greenback, when tracked by the US Dollar Index (DXY), adds to Wednesday’s pullback and revisits the 99.60/50 region on Thursday.

US Dollar Index looks to data, ECB

The index loses ground for the second session in a row on Thursday following fresh cycle peaks around 100.50 recorded in the previous session.

The corrective decline in the dollar comes on the back of another daily retracement in US yields, which extend losses following recent tops, as investors continue to digest the latest inflation results amidst rising speculation that the raise of consumer prices could be at/near its peak.

Later in the session, Retail Sales will grab all the attention seconded by usual weekly Claims, Business Inventories and the Flash print of the Consumer Sentiment for the current month.

What to look for around USD

The dollar’s rally faltered around 100.50 earlier in the week and comes under pressure in tandem with the knee-jerk in US yields across the curve. So far, the greenback’s price action continues to be dictated by the likeliness of a tighter rate path by the Fed and geopolitics. In addition, the case for a stronger dollar also remains well propped up by high US yields and the solid performance of the US economy.

Key events in the US this week: Retail Sales, Initial Claims, Business Inventories, Flash Consumer Sentiment (Thursday) – Industrial Production, TIC Flows (Friday).

Eminent issues on the back boiler: Escalating geopolitical effervescence vs. Russia and China. Fed’s rate path this year. US-China trade conflict. Future of Biden’s Build Back Better plan.

US Dollar Index relevant levels

Now, the index is retreating 0.22% at 99.62 and the initial support comes at 97.68 (weekly low March 30) followed by 96.96 (100-day SMA) and then 95.67 (weekly low February 16). On the other hand, the breakout of 100.55 (monthly high May 14 2020) would open the door to 100.86 (high April 24 2020) and finally 100.93 (monthly high April 11 2020).