US Dollar Index collapses to 98.00 on geopolitics
|- DXY tanked to the 98.00 area on Tuesday.
- Auspicious headlines open the door to a ceasefire in Ukraine.
- CB’s Consumer Confidence next of note in the calendar.
The greenback accelerates losses to 2-week lows near the 98.00 mark when tracked by the US Dollar Index (DXY) on turnaround Tuesday.
US Dollar Index offered on upbeat news from Ukraine
The index shed more than a big figure on Tuesday following encouraging news from the geopolitical scenario, which at the same time has opened the door to a potential ceasefire and eventually the end of the military conflict between Russia and Ukraine.
The dollar rapidly lost ground and approached the 98.00 region alon with a U-turn in yields in the belly and the long end of the curve, while the short end still cling to daily gains just below the 2.50% area.
In the docket, the House Price Index gauged by the FHFA rose 1.6% MoM in January, while house prices measured by the S&P/Case-Shiller Index gained 19.1% in the year to January.
Later in the session, the Conference Board’s Consumer Confidence is due along with JOLTs Job Openings.
What to look for around USD
Positive developments from the geopolitical landscape put the buck under strong downside pressure and forced the index to drop further into the negative territory. In the meantime, very near-term price action in the greenback continues to be dictated by geopolitics, while the case for a stronger dollar in the medium/long term remains well propped up by the current elevated inflation narrative, a potential more aggressive tightening stance from the Fed, higher US yields and the solid performance of the US economy.
Key events in the US this week: FHFA House Price Index, CB Consumer Confidence (Tuesday) – Mortgage Applications, ADP Employment Change, Final Q4 GDP (Wednesday) – PCE Price Index, Initial Jobless Claims, Personal Income, Personal Spending (Thursday) – Nonfarm Payrolls, Unemployment Rate, Final Manufacturing PMI, ISM Manufacturing PMI (Friday) .
Eminent issues on the back boiler: Escalating geopolitical effervescence vs. Russia and China. Fed’s rate path this year. US-China trade conflict. Futures of Biden’s Build Back Better plan.
US Dollar Index relevant levels
Now, the index is down 1.03% 98 09 and a break above 99.41 (2022 high March 7) would open the door to 100.00 (psychological level) and finally 100.55 (monthly high May 14 2020). On the flip side, the next down barrier emerges at 97.72 (weekly low March 17) seconded by 97.71 (weekly low March10) and then the 55-day SMA at 96.92.
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