USD Index remains under pressure near 102.00

• The index briefly pierces the 102.00 support early on Tuesday.
• US yields attempt a tepid rebound amidst the prevailing downtrend.
• Factory Orders, JOLTs Job Openings next on tap in the docket.

The USD Index (DXY), which gauges the greenback vs. a bundle of its main rivals, alternates gains with losses around the 102.00 neighbourhood on turnaround Tuesday.

USD Index looks at data, inflation concerns

The index trades in a vacillating mood near the 102.00 area, always against the backdrop of the broader bearish trend in place since early March, which saw DXY deflate from the vicinity of 106.00 to the current area near 102.00.

In the meantime, inflation concerns appear to have re-emerged following Monday’s jump in crude oil prices. This, in turn, seems to have reignited speculation of a 25 bps rate hike at the Fed’s May event.

Later in the US calendar, Factory Orders for the month of February are due seconded by the IBD/TIPP Economic Optimism index and the speech by FOMC L. Cook (permanent voter, centrist).

What to look for around USD

The index hovers around the 102.00 zone amidst alternating risk appetite trends and rising cautiousness ahead of the release of the US jobs report towards the end of the week.

Also weighing on the current bearish outlook for the dollar emerges the almost omnipresent view that the Federal Reserve could pause its ongoing tightening stance in May, which has been propped up by persevering disinflation, nascent weakness in some key fundamentals and fresh concerns surrounding the banking sector

In addition, dwindling hawkishness from Fed rate setters also seems to have removed some strength from the greenback, particularly since the latest FOMC gathering and events around SVB and other medium-size US lenders.

Key events in the US this week: Factory Orders (Tuesday) – MBA Mortgage Applications, ADP Employment Change, Balance of Trade, Final Services PMI, ISM Non-Manufacturing (Wednesday) – Initial Jobless Claims (Thursday) – Non-Farm Payrolls, Unemployment Rate, Consumer Credit Change (Friday).

Eminent issues on the back boiler: Persistent debate over a soft/hard landing of the US economy. Terminal Interest rate near the peak vs. speculation of rate cuts in 2024. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is advancing 0.08% at 102.13 and faces the next resistance level at 103.35 (55-day SMA) followed by 103.96 (100-day SMA) and then 105.88 (2023 high March 8). On the other hand, the breach of 101.91 (monthly low March 23) would open the door to 100.82 (2023 low February 2) and finally 100.00 (psychological level).