US Dollar Index clings to gains around 98.60, focus on NFP, ISM

• The index adds to Thursday’s gains north of 98.00.
• US yields regain upside traction as bonds selloff resumes.
• US Nonfarm Payrolls, ISM Manufacturing PMI next of note.

The greenback, in terms of the US Dollar Index (DXY), extends the rebound to the 98.60 region, where some initial resistance seems to have turned up so far on Friday.

US Dollar Index looks to NFO, Ukraine

The index adds to the recent advance further north of the 98.00 hurdle at the end of the week amidst the resumption of the selloff in the debt market and lack of news from the geopolitical scenario.

Indeed, US yields regain the upside momentum across the curve following the recent knee-jerk against the backdrop of further selling pressure in global bond markets.

Furthermore, additional wings for the buck came in response to the lack of any progress in the Russia-Ukraine peace talks so far, despite both parties pledged to continue the negotiations in the next few days.

Very interesting day in the US docket, as Nonfarm Payrolls will take centre stage along with the Unemployment Rate, the ISM Manufacturing and Construction Spending, all for the month of March.

What to look for around USD

The index extends the bounce to the area well north of the 98.00 hurdle at the end of the week. In the meantime, very near-term price action in the greenback continues to be dictated by geopolitics, while the case for a stronger dollar in the medium/long term remains well propped up by the current elevated inflation narrative, a potential more aggressive tightening stance from the Fed, higher US yields and the solid performance of the US economy.

Key events in the US this week: Nonfarm Payrolls, Unemployment Rate, Final Manufacturing PMI, ISM Manufacturing PMI (Friday).

Eminent issues on the back boiler: Escalating geopolitical effervescence vs. Russia and China. Fed’s rate path this year. US-China trade conflict. Futures of Biden’s Build Back Better plan.

US Dollar Index relevant levels

Now, the index is up 0.13% 98 47 and a break above 99.36 (weekly high March 28) would open the door to 99.41 (2022 high March 7) and finally 100.00 (psychological level). On the flip side, the next down barrier emerges at 97.68 (weekly low March 30) seconded by 97.10 (55-day SMA) and then 96.62 (100-day SMA).