US Dollar Index challenges daily lows near 95.50

• DXY comes under pressure and flirts with 95.50.
• US yields correct lower and collaborate with the weak dollar.
• US Housing Starts, Building Permits surprised to the upside.

The US Dollar Index (DXY), which gauges the buck vs. a bundle of its main rival currencies, keeps trading in the negative territory around the mid-95.00s in the wake of the opening bell in Wall St on Wednesday.

US Dollar Index weaker on lower yields

The index comes under pressure after climbing as high as the 95.80/85 band earlier in the week, all against the backdrop of the strong rebound in US yields, which saw yields across the curve renew the uptrend and record fresh tops.

Other than higher yields, the constructive view on the greenback also finds support on the prospects of the start of the Fed’s tightening cycle as soon as at the March meeting coupled with the perception that the balance sheet runouff could also begin sooner than many anticipates.

Wednesday’s US calendar saw results in the housing sector coming above expectations in December after Building Permits rose by 1.873M units, or 9%, and Housing Starts rose by 1.702M units, or 1.4%. Earlier in the session, MBA Mortgage Applications rose 2.3% in the week to January 14.

US Dollar Index relevant levels

Now, the index is losing 0.19% at 95.54 and a break above 95.83 (weekly high Jan.18) would open the door to 96.46 (2022 high Jan.4) and finally 96.93 (2021 high Nov.24). On the flip side, the next down barrier emerges at 94.75 (100-day SMA) followed by 94.62 (2022 low Jan.14) and then 93.27 (monthly low Oct.28 2021).