US Dollar Index retreats from fresh cycle peaks around 101.70

• DXY gives away part of the earlier spike to the 101.70/75 band.
• US yields in the short end and the belly of the curve add to recent losses.
• The Chicago Fed Index, Dallas Fed Index come next in the US docket.

The greenback, when gauged by the US Dollar Index (DXY) surrenders some of its earlier gains to new cycle tops in the 101.70/75 zone at the beginning of the week.

US Dollar Index bolstered by risk-off, China

The index advances for the third session in a row on Monday and navigates levels last seen in early March 2020 on the back of the resumption of the risk-off sentiment, particularly exacerbated after renewed worries over a potential economic slowdown in China.

Fresh jitters on the latter resurfaced in response to the persistent lockdown measures following the relentless increase of coronavirus cases.

US cash markets, in the meantime, show some renewed interest in bond, which keep yields depressed along the curve so far in the European morning.

In the US data sphere, the Chicago Fed National Activity Index is due seconded by the Dallas Fed Manufacturing Index and short-term notes auctions.

What to look for around USD

The dollar faces renewed buying interest and challenges the 2022 highs past the 101.00 barrier. So far, the greenback’s price action continues to be dictated by the likeliness of a tighter rate path by the Fed as well as 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: Chicago Fed National Activity Index (Monday) – Durable Goods Orders, House Price Index, CB Consumer Confidence, New Home Sales (Tuesday) – MBA Mortgage Applications, Flash Goods Trade Balance, Pending Home Sales (Wednesday) – Advanced Q1 GDP Growth Rate, Initial Claims (Thursday) – Core PCE, PCE, Final Consumer Sentiment, Personal Income/Spending (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 0.38% at 101.50 and the breakout of 101.73 (2022 high April 25) would open the door to 101.91 (high March 25 2020) and finally 102.99 (2020 high March 20). On the other hand, initial contention emerges at 99.81 (weekly low April 21) seconded by 99.57 (weekly low April 14) and then 97.68 (weekly low March 30).