US Dollar Index remains bid near 101.00

• DXY alternates gains with losses near 101.00.
• US yields advances to new highs on Tuesday.
• US housing data surprised to the upside in March.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, extends the rally to the area just beyond the 101.00 mark on turnaround Tuesday.

US Dollar Index looks to Fed, inflation, Ukraine

The index remains bid for yet another session, this time managing to briefly surpass the key 101.00 barrier to reach levels last seen more than two years ago.

Another good day in US yields also lends extra wings to the buck in a context where the deterioration of the geopolitical scenario also favours inflows into the US dollar via safe haven demand.

In the US docket, Housing Starts expanded 0.3% MoM, or by 1.793M units, in March while Building Permits also expanded 0.4% inter-month, or 1.873M units.

What to look for around USD

The dollar’s rally surpassed albeit ephemerally the 101.00 mark in the first half of the 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 also remains well propped up by high US yields and the solid performance of the US economy.

Key events in the US this week: Housing Starts, Building Permits, IMF World/Bank Spring Meetings (Tuesday) – IMF World/Bank Spring Meetings, Existing Home Sales, Fed Beige Book (Wednesday) - IMF World/Bank Spring Meetings, Initial Claims, Philly Fed Index, Fed Powell (Thursday) - IMF World/Bank Spring Meetings, Flash Services/Manufacturing PMIs (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 0.06% at 100.87 and the breakout of 101.02 (2022 high April 19) would open the door to 101.91 (high March 25 2020) and finally 102.99 (2020 high March 20). On the downside, the initial support comes at 99.57 (weekly low April 14) followed by 97.68 (weekly low March 30) and then 97.10 (100-day SMA).