US Dollar Index recedes from new highs past 101.00

• DXY now gives away some gains following new peaks.
• US yields trade on a mixed fashion on turnaround Tuesday.
• IMF/World Bank Meetings, housing data next on tap.

The greenback, in terms of the US Dollar Index (DXY), clings to daily gains after hitting new peaks just above 101.00 the figure earlier in the session.

US Dollar Index remains bolstered by Fed speculation

The index advances for the fourth consecutive session and briefly surpassed the 101.00 mark for the first time since late March 2020 during early trade.

The march north in the dollar remains propped up by firmer speculation of a tighter normalization of the Fed’s monetary conditions in the next months, as well as a probable reduction of the balance sheet sooner than anticipated.

By the same token, US yields extend their consolidative mood in the upper end of the range along the curve and remain also underpinned by hawkish Fedspeak. On the latter, St. Louis Fed J.Bullard (voter, hawk) said over the weekend that a 75 bps rate hike is not ruled out, although the base case remains for a 50 bps hike.

In the US data space, Housing Starts and Building Permits are due along with the speech by Chicago Fed C.Evans (2023 voter, centrist). In addition, markets’ attention will be on the IMF/World Bank Spring Meetings and Economic Outlook.

What to look for around USD

The dollar’s rally surpassed albeit ephemerally the 101.00 mark in the first half of the week. 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: Housing Starts, Building Permits, IMF World/Bank Spring Meetings (Tuesday) – IMF World/Bank Spring Meetings, Existing Home Sales, Fed Beige Book (Wednesday) - IMF World/Bank Spring Meetings, Initial Claims, Philly Fed Index, Fed Powell (Thursday) - IMF World/Bank Spring Meetings, Flash Services/Manufacturing PMIs (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 0.02% at 100.84 and the breakout of 101.02 (2022 high April 19) would open the door to 101.91 (high March 25 2020) and finally 102.99 (2020 high March 20). On the downside, the initial support comes at 99.57 (weekly low April 14) followed by 97.68 (weekly low March 30) and then 97.10 (100-day SMA).