US Dollar Index: Struggle for establishment above 100.00 continues, US CPI eyed

• The DXY has faced barricades above 100.00 multiple times, which can favor a reversal.
• FOMC member Evans sees an interest rate decision featuring 50 bps in May.
• The 10-year US Treasury yields have jumped near 2.77% ahead of a tight liquidity environment.

The US dollar index (DXY) is continuously struggling to sustain above the mighty figure of 100.00 amid uncertainty over the US Consumer Price Index (CPI), which will release on Tuesday. It seems that the DXY is parting ways with the US Treasury yields as the former is performing lackluster while the latter is surging higher firmly. The 10-year benchmark US Treasury yields have climbed to near 2.77% as investors have started betting on an aggressive interest rate hike by the Federal Reserve (Fed) in May.

Chicago Fed President Charles Evans's speech

The speech from the Chicago Fed President and Federal Open Market Committee (FOMC) member Charles Evans emphasized rising prices in the US and their persistency for a longer period. FOMC member Evans believes that the Fed may tighten the interest rate by 200 basis points (bps) this year and will reach the neutral rates (which he sees between 2.25-2.50%) by this year only. Also, the 50 bps interest rate elevation is highly likely possible in May.

Preview of US CPI

Market estimates for the yearly US consumer Price Index (CPI) land at 8.3% higher than the previous print of 7.9%. This advocates for a material shift in volatility as a higher US CPI print will raise the odds of an aggressive interest rate hike significantly.

Meanwhile, the latest Reuters poll of economists advocates consecutive 50 bps interest rate hikes for May and June, considering the likely fresh multi-decade high US inflation at 8.3%.

Key events this week: Consumer Price Index (CPI), Producer Price Index (PPI), Initial Jobless Claims, Retail Sales, Michigan Consumer Sentiment Index (CSI), and Industrial Production.

Eminent issues on the back boiler: Russia-Ukraine Peace Talks, Reserve Bank of New Zealand (RBNZ) interest rate decision, European Central Bank (ECB) interest rate decision, and Bank of Canada (BOC) interest rate decision.