US Dollar Index looks bid above 100.00 ahead of US CPI

• The index extends the rally north of 100.00 on Tuesday.
• US 10y note yields leave behind the 2.80% level.
• US inflation tracked by the CPI comes next in the docket.

The greenback, in terms of the US Dollar Index (DXY), keeps the uptrend well and sound for yet another session, this time beyond the key 100.00 mark on Tuesday.

US Dollar Index focuses on CPI

The index advances for the ninth consecutive session so far on turnaround Tuesday, recording new cycle peaks further north of the psychological 100.00 yardstick and always underpinned by the march higher in US yields.

The unabated move higher in the greenback comes along an equally strong uptick in US yields across the curve, where the 10y note yields surpass the 2.80% barrier for the first time since December 2018 and continue to target the key 3.00% barrier in the short term.

In addition, no news from the geopolitical landscape also seems to bolster the sentiment in the dollar, while peace talks between Russia and Ukraine remain stalled.

Later in the NA session, all the attention will be on the release of US inflation figures tracked by the CPI for the month of March. In addition, the NFIB Business Optimism Index, the IBD/TIPP Economic Optimism Index and Monthly Budget Statement are also due seconded by the speech of FOMC L.Brainard (permanent voter, hawkish) and Richmond Fed T.Barkin (2024 voter, centrist).

What to look for around USD

The dollar finally managed to retake and advance further north of the psychological 100.00 hurdle so far this week. So far, the greenback’s price action continues to be dictated by the likeliness of a tighter rate path by the Fed and geopolitics. In addition, the case for a stronger dollar remains well propped up by the current elevated inflation narrative, higher US yields and the solid performance of the US economy.

Key events in the US this week: Inflation Rate (Tuesday) – MBA Mortgage Applications, Producer Prices (Wednesday) – Retail Sales, Initial Claims, Business Inventories, Flash Consumer Sentiment (Thursday) – Industrial Production, TIC Flows (Friday).

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

US Dollar Index relevant levels

Now, the index is advancing 0.24% at 100.21 and a break above 100.55 (monthly high May 14 2020) would aim to 100.86 (high April 24 2020) and finally 100.93 (monthly high April 11 2020). On the downside, initial contention is seen at 97.68 (weekly low March 30) seconded by 97.61 (55-day SMA) and then 96.90 (100-day SMA).