US Dollar Index: US debt ceiling fears prod DXY bulls above 102.00 as full markets return

• US Dollar Index grinds higher after three-day winning streak, near the highest level in two weeks.
• US Treasury Department raises fears of early exhaustion of funds if debt ceiling remains intact.
• Solution to First Republican Bank problem, for now, joins mixed US data to underpin cautious optimism, favors DXY bulls.
• US Factory Orders for March will be important for intraday guide, Fed, US NFP eyed for clear directions.

US Dollar Index (DXY) bulls take a breather around 102.10-15 during the early hours of Tuesday’s trading, after refreshing the two-week high and posting the three-day uptrend the previous day. In doing so, the greenback’s gauge versus the six major currencies bears the burden of fresh fears surrounding the US default as major markets return from holiday.

US Treasury Department recently renewed fears of the US default by pulling forward the date of running out of funds to match obligations if the current debt ceiling isn’t altered by June 01, previously signaled as July. “US Treasury Secretary Janet Yellen said in a letter to Congress that the agency may be unable to meet all of its debt obligations as soon as June 1 if the debt ceiling is not raised, putting new urgency on talks in Congress,” said Reuters.

With this, chatters of US President Joe Biden’s call to four top US diplomats and arranging a meeting on May 09 made rounds. On the same line, US House of Representatives Speaker Kevin McCarthy mentioned that there is a bill sitting in the Senate as we speak that would put the risk of default to rest.

On the other hand, Friday’s upbeat US inflation clues via Core PCE Price Index joined the solution on First Republic Bank to underpin the market’s optimism. The same helped Wall Street even if the S&P 500 Futures printed mild losses of late. Further, the US Treasury bond yields began the key week on a positive footing and allowed the US Dollar to extend the previous gains.

That said, the US regulators seized assets of the FRB and sold them to the new buyer, namely JP Morgan. “JPMorgan will pay $10.6 billion to the U.S. Federal Deposit Insurance Corp (FDIC) as part of the deal to take control of most of the San Francisco-based bank's assets and get access to First Republic's coveted wealthy client base,” said Reuters.

On the other hand, US ISM Manufacturing PMI improved to 47.1 for April versus 46.3 prior and 46.6 market forecasts while the S&P Global Manufacturing PMI for the said month eased to 50.2 versus 50.4 first estimations.

Looking forward, US Factory Orders for March, expected to rise by 0.8% MoM versus -0.7% prior, can entertain US Dollar Index (DXY) traders amid a light calendar at home. However, risk catalysts and the recent pick-up in the hawkish Fed bets can keep the DXY buyers hopeful.

Technical analysis

A daily closing beyond the five-week-old resistance line, now immediate support around 101.90, joins bullish MACD signals and upbeat RSI (14), not overbought, to keep the US Dollar Index (DXY) buyers hopeful.