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  • Writer's pictureanalysiswatch

Title: US Dollar Index falters around 99.00 ahead of data

April 05, 2022 3:42 AM

By: AnalysisWatch

The greenback, as measured by the U.S. Dollar Index, is under downward pressure near 99.00 on Tuesday.

After three consecutive daily rises, the dollar's upward momentum appears to be running out of steam near the key 99.00 level on Tuesday.

Meanwhile, U.S. yields continued to rise, albeit at a slower pace, as investors became more cautious following the recent reversal in the U.S. yield curve.

The absence of fresh headlines about the war in Ukraine and the lack of progress in the ongoing peace talks between the two parties should limit the greenback's downside for now, while ongoing speculation about a more aggressive Fed interest rate path in the coming months also adds to the broadly constructive view on the dollar.

In the U.S., the trade balance figures for February are due first, followed by the final services PMI and the release of the ISM non-manufacturing index for March.

The dollar has managed to rebound strongly from its low in the second half of last week in the 97.70 area. Meanwhile, the greenback's short-term price action continues to be dictated by geopolitics, while the case for a stronger dollar in the medium to long term is supported by current high inflation, a possible more aggressive Fed tightening policy, higher U.S. yields, and the solid performance of the U.S. economy.

Currently, the index is 0.09% lower at 98.89 and faces the next support at 97.68 (the weekly low of March 30), followed by 97.23 and then 96.69 (the 100-day SMA). On the other hand, a break above 99.36 (the weekly high of March 28) would open the door to 99.41 and eventually 100.00 (the psychological mark).

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