USD Index trades without direction below 102.00

• The index climbs to the 101.80 during early trade on Monday.
• The Fed is likely to hike rates by 25 bps at the May 3 gathering.
• NAHB Index, TIC Flows, NY Empire State index next on tap.

The greenback gives away gains to the 101.80 region recorded earlier in the Asian trading hours and returns to the 101.60 zone when gauged by the USD Index (DXY) on Monday.

USD Index looks at 102.00

The index struggles to regain upside traction amidst the broad-based absence of a clear direction in the global markets following the opening bell in the old continent on Monday.

Indeed, the dollar surrenders the initial uptick to the 101.80/85 band against the backdrop of a generalized consolidative mood in the market and the tepid attempt to extend the march north in US yields.

In the meantime, bets on a 25 bps rate hike by the Federal Reserve at the May 3 event remain on the rise and mainly propped up by hawkish Fedspeak, while the still elevated inflation also seems to maintain the prudent stance among investors.

Later in the NA session, the NAHB Housing Market Index is due seconded by the NY Empire State Index and TIC Flows.

What to look for around USD

The dollar’s upside appears to have met a tough barrier around 101.80 so far at the beginning of the week.

In the meantime, the marked retracement in the buck since March has been underpinned by the pick-up in the perception that the Federal Reserve could make a pause in its current tightening cycle just after the May meeting.

In favour of a pivot in the Fed’s normalization process, however, still emerges the persevering disinflation, nascent weakness in some key fundamentals and somewhat persistent concerns surrounding the banking sector.

Key events in the US this week: NAHB Housing Market Index, TIC Flows (Monday) – Building Permits, Housing Starts (Tuesday) – MBA Mortgage Applications, Fed’s Beige Book (Wednesday) – Initial Claims, Philly Fed Index, CB Leading Index, Existing Home Sales (Thursday) - Flash Manufacturing/Services PMIs (Friday).

Eminent issues on the back boiler: Persistent debate over a soft/hard landing of the US economy. Terminal Interest rate near the peak vs. speculation of rate cuts in 2024. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is advancing 0.03% at 101.60 and the next resistance level emerges at 103.05 (monthly high April 3) seconded by 103.52 (100-day SMA) and then 105.11 (weekly high March 15). On the flip side, the breach of 100.78 (2023 low April 14) would open the door to 100.00 (psychological level) and finally 99.81 (weekly low April 21 2022).