US Dollar Index pushes higher and approaches 102.00

• DXY extends the upside momentum near the 102.00 mark.
• Yields extend the corrective downside along the curve.
• CB’s Consumer Confidence, housing sector in the limelight.

The greenback, in terms of the US Dollar Index (DXY), remains bid and now trades at shouting distance from the key 102.00 yardstick on turnaround Tuesday.

US Dollar Index looks to risk trends, data

The index advances fore the fourth consecutive session on Tuesday and records new cycle peaks just below 102.00 the figure, always on the back of the persevering risk aversion sentiment and the pessimism surrounding the risk complex.

The preference for the safe haven universe, in the meantime, keeps underpinning the demand for bonds and therefore putting US yields under persistent downside pressure. On this, investors remain concerned about the impact of current lockdown measures in China on its economic growth prospects as well as the likelihood of a Fed-led recession in the US economy.

Data wise in the US, all the attention will be on the release of the Consumer Confidence gauged by the Conference Board as well as Durable Goods Orders and results from the housing sector.

What to look for around USD

The dollar faces renewed buying interest and challenges the 102.00 neighbourhood in the first half of the week amidst persistent risk-off mood and declining US yields. So far, the greenback’s price action continues to be dictated by the likeliness of a tighter rate path by the Fed and its potential effects on the economy as well as geopolitics. The tightening of the Fed’s normalization process appears so far propped up by elevated inflation and the solid health of the labour market.

Key events in the US this week: 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 0.19% at 101.92 and the breakout of 101.96 (2022 high April 26) would open the door to 102.00 (round level) 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).