US Dollar Index: Bulls look to add to the rebound above 102.00

• DXY trades with light gains above the 102.00 mark.
• US yields extend the gradual move lower along the curve.
• Advanced Q1 GDP, Claims, Pending Home Sales next on tap.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main rival currencies, advances modestly above the102.00 mark on Thursday.

US Dollar Index looks to data, risk trends

The index posts gains for the second session in a row on Thursday and looks to consolidate the breakout of the 102.00 yardstick and put further distance from Monday’s new lows in the 101.65/60 band.

The dollar appears slightly bid in the wake of the opening bell in Euroland, as market participants continue to digest the release of the FOMC Minutes late on Wednesday. On the latter, there were no surprises following an upbeat assessment of the economy’s health by FOMC members, who also agreed that a 50 bps rate hike would be appropriate at the next couple of meetings.

In the US cash markets, yields extend the relentless corrective downside along the curve so far, in line with the performance in the rest of the global debt markets.

Later in the session, weekly Claims are due seconded by another revision of the Q1 GDP and Pending Home Sales.

What to look for around USD

The dollar extends the weekly rebound from monthly lows in the sub-102.00 region printed earlier in the week.

In the meantime, a tighter rate path by the Federal Reserve looks more and more priced in, while the elevated inflation narrative and the tight labour market seem to still support further upside in the dollar in the longer run.

On the negatives for the greenback, the incipient speculation of a “hard landing” of the US economy as a result of the Fed’s more aggressive normalization carries the potential to undermine the bullish prospects for the buck.

Key events in the US this week: Flash Q1 GDP, Initial Claims, Pending Home Sales (Thursday) – Core PCE, Personal Income/Spending, Final Consumer Sentiment (Friday).

Eminent issues on the back boiler: Speculation of a “hard landing” of the US economy. Escalating geopolitical effervescence vs. Russia and China. Fed’s more aggressive rate path this year and 2023. US-China trade conflict. Future of Biden’s Build Back Better plan.

US Dollar Index relevant levels

Now, the index is gaining 0.02% at 102.07 and a break above 105.00 (2022 high May 13) would open the door to 105.63 (high December 11 2002) and finally 106.00 (round level). On the other hand, the next contention emerges at 101.64 (monthly low May 24) followed by 101.03 (55-day SMA) and then 99.81 (weekly low April 21).