US Dollar Index clinches new peaks past 100.50

• DXY bounces off weekly lows near 99.60.
• US yields reverse course and now trade with modest gains.
• US Retail Sales expanded at a month 0.5% in March.

The greenback quickly left the area of weekly lows around 99.60 and climbed past the 100.50 level to record new highs when gauged by the US Dollar Index (DXY) on Thursday.

US Dollar Index returns above 100.00 on ECB

The index fades Wednesday’s moderate pullback after the ECB disappointed those who were expecting a convincing hawkish message, which eventually motivated the euro to give away earlier gains and extend the drop to fresh YTD lows below the 1.0800 mark.

In the US docket, headline Retail Sales expanded 0.5% MoM in March, a tad below estimates, while core sales surprised to the upside by expanding 1.1% from a month earlier. In addition, Initial Claims rose by 185K in the week to April 9. Later in the session, Business Inventories is due seconded by the flash Consumer Sentiment for the current month.

What to look for around USD

The dollar’s rally resumed the upside and advances to new cycle peaks past 100.50 in line with the resumption of the bullish bias in US yields on Thursday. 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 advancing 0.67% at 100.51 and 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). On the downside, 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).