Dollar Index remains on hunt for a break above 91.00

The dollar index, which tracks the value of the greenback against majors, is mildly bid around 90.84 in Asia and could scale the 91.00 mark in a convincing manner if the 10-year treasury yield reports big gains above 3 percent. 

The DXY did clock a high of 91.08 yesterday, but closed on the back foot at 90.93, snapping the five-day winning streak. However, a big break above 91.00 is still on the cards as the 10-year yield is trading around 3 percent and looks north, as suggested by the bullish technical setup.

Kathy Lien from BK Asset Management says the yields are being driven higher by rising in inflation and rate hike expectations. At the beginning of this month, investors saw only a 79% chance of a hike in June but those odds sit at 93% today, adds Lien. So, the American dollar looks set to extend the rally. 

That said, the greenback could depreciate, especially against safe havens like the Japanese Yen and the Swiss Franc if the equities turn risk-averse in response to rising bond yields. 

Dollar Index Technical Levels

A break above 91.08 (previous day's high) would open the doors to 91.76 (Jan. 2 low), above which a major resistance is seen at 92.50 (Nov. 27 low). On the downside, breach of support at 90.60 (April 5 high) could yield a pullback to 90.45 (March 20 high) and 90.00 (psychological level).