USD Index appears firm above 104.00, or multi-week highs

• The index extends the advance past the 104.00 barrier.
• US yields climb to fresh highs following data, hawkish Fedspeak.
• Fed’s Barkin, CB Leading Index next on tap in the docket.

The greenback pushes higher and prints fresh 6-week tops north of the 104.00 hurdle when gauged by the USD Index (DXY) at the end of the week.

USD Index remains strong on Fedspeak, firm data

The index extends the weekly recovery and climbs to 6-week peaks past the 104.00 barrier on Friday, as investors continue to assess the recent firmer results from the US docket and hawkish Fedspeak.

On the latter, Cleveland Fed L.Mester and St.Louis Fed J.Bullard left the door open to a 50 bps rate hike at the March event on the back of the still elevated inflation, tightness of the labour market and resilience of the US economy.

So far, and according to CME Group’s FedWatch Tool, the probability of a 25 bps rate hike at the March 22 meeting hovers around the 87% (from nearly 91% a week ago).

In the US data space, the CB Leading Index for the month of January will be the sole release on Friday along with the speech by Richmond Fed T.Barkin (2024 voter, centrist).

What to look for around USD

The dollar seems to have broken above the multi-session consolidative phase and keeps the relentless recovery further north of the 104.00 level, always against the backdrop of the renewed hawkish message from Fed’s rate setters.

The probable pivot/impasse in the Fed’s normalization process narrative is expected to remain in the centre of the debate along with the hawkish message from Fed speakers, all after US inflation figures for the month of January showed consumer prices are still elevated, the labour market remains tight and the economy maintains its resilience.

Key events in the US this week: CB Leading Index (Friday).

Eminent issues on the back boiler: Rising conviction of a soft landing of the US economy. Slower pace of interest rate hikes by the Federal Reserve vs. shrinking odds for a recession in the next months. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is gaining 0.35% at 104.45 and faces the next hurdle at 104.45 (monthly high February 17) seconded by 105.63 (2023 high January 6) and then 106.44 (200-day SMA). On the other hand, the breach of 102.58 (weekly low February 14) would open the door to 100.82 (2023 low February 2) wand finally 100.00 (psychological level).