US Dollar Index to dip towards 97.00-95.70 on easing Ukraine tensions – Westpac
|The US Dollar Index (DXY) is flatlining around 99. DXY could test lower levels near term if momentum toward de-escalation in Ukraine continues, but weakness should prove fleeting with the Federal Reserve sticking resolutely to a hawkish path.
A move above 100 is on the cards in coming weeks
“A front-loaded Fed hike cycle should provide sustained tailwinds for DXY through 2022 though past Fed hike cycles caution that a sustained Fed-driven appreciation profile might take time to develop.”
“There’s more near term DXY downside to be had if momentum toward a de-escalation in Eastern Europe builds, possibly as low as 97.0-95.70, but with the US curve flattening aggressively and short end yield support continuing to build, DXY still looks headed to 100+ in coming weeks.”
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