US Dollar Index loses the grip and puts the 103.00 area to the test

• DXY meets intense selling pressure and approaches 103.00.
• US yields reverse the initial upside and refocus on the downside.
• Factory Orders, JOLTs Job Openings come next in the docket.

The greenback fades Monday’s uptick and recedes to the 103.00 zone when gauged by the US Dollar Index (DXY) on Tuesday.

US Dollar Index weaker on yields, looks to FOMC

The index comes under downside pressure and gives away gains recorded at the beginning of the week, although the 103.00 region seems to have held the downside well enough so far on Tuesday.

The knee-jerk in the buck comes on the back of the equally corrective move in US yields along the curve, where the 10y note appears to have met quite a tough nut to crack around the key 3.0% level.

In the US data space, Factory Orders and JOLTs Job Openings/Quits, both releases for the month of March, are due next in the NA session.

What to look for around USD

The dollar trades on a negative fashion although it manages well to remain above the 103.00 mark so far on Tuesday and ahead of the key FOMC gathering (Wednesday). The Fed’s more aggressive rate path continues to be the main driver behind the robust bullish stance in the dollar, which also appears reinforced by the current elevated inflation narrative and the solid health of the labour market. Collaborating with the latter appear bouts of geopolitical tensions as well as the move higher in US yields.

Key events in the US this week: Factory Orders (Tuesday) – Mortgage Applications, ADP Report, Balance of Trade, Final Services PMI, ISM Non-Manufacturing, FOMC Meeting (Wednesday) – Initial Claims (Thursday) – Nonfarm Payrolls, Unemployment Rate, Consumer Credit Change (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 retreating 0.39% at 103.19 and faces the next support at 99.81 (weekly low April 21) seconded by 99.57 (weekly low April 14) and then 97.68 (weekly low March 30). On the upside, the breakout of 103.92 (2022 high April 28) would open the door to 104.00 (round level) and finally 105.63 (high December 11 2002).