US Dollar Index climbs to new cycle tops around 102.70

• DXY rises to fresh highs well north of the 102.00 mark.
• US yields regain some footing and reverses recent weakness.
• Mortgage Applications, Trade Balance, Pending Home Sales next on tap.

The US Dollar Index (DXY), which gauges the buck vs. a bundle of its main competitors, keeps the buying pressure well and sound past the 102.00 mark on Wednesday.

US Dollar Index now targets the 2020 peak near 103.00

The index extends the rally for the fifth consecutive session and has quickly left behind the key 102.00 barrier to clinch new highs in levels last seen back in March 2020.

Wednesday’s uptick in the dollar remains also underpinned by the resumption of the upside pressure in US yields along the curve, while persistent geopolitical concerns also add to the upbeat mood in the currency.

Data wise in the US docket, weekly Mortgage Applications are due in the first turn seconded by Trade Balance figures and Pending Home Sales.

What to look for around USD

The dollar picks up extra pace and surpasses the key 102.00 barrier in quite a convincing fashion so far on Wednesday. Persevering risk aversion, geopolitics and the bounce in US yields all collaborate with the upside momentum in the buck. In the meantime, the likelihood of a tighter adjustment to the Fed’s monetary conditions continues to be the main driver behind the sharp move higher in the index in past sessions, which also appears reinforced by current elevated inflation narrative and the solid health of the labour market.

Key events in the US this week: 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 0.22% at 102.52 and the breakout of 102.74 (2022 high April 27) would open the door to 102.99 (2020 high March 20) and finally 103.82 (2017 high January 3). 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).