US Dollar Index: DXY bulls eye 102.00 amid banking jitters, debt ceiling drama

US Dollar Index (DXY) struggles to overcome the 101.90 resistance confluence, following the biggest daily jump in a week, as traders seek more clues to defend the latest rebound amid early Wednesday.

Fresh fears of banking fallouts and US default allowed the greenback’s gauge versus the six major currencies to print the first daily gains in four the previous day. However, the cautious mood ahead of today’s US Durable Goods Orders for March and major central banks’ efforts to restore the market’s confidence seems to challenge the US dollar bulls of late.

On Tuesday, the First Republic Bank’s (FRB) disappointing earnings reports joined the executives’ resistance in taking questions and no earnings guidance to trigger a fresh wave of banking jitters. Even so, the major central banks tried to restore market confidence by curtailing the US Dollar operations initiated during the first wave of the banking crisis. “The world's top central banks are cutting the frequency of their dollar liquidity operations with the U.S. Federal Reserve from May, sending the clearest signal yet that last month's financial market volatility is essentially over,” said Reuters.

Apart from the banking crisis, fears of US debt ceiling expiration also weigh on the risk appetite and allow the DXY to remain firmer. That said, US Treasury Secretary Janet Yellen warned that failure by Congress to raise the government's debt ceiling–and the resulting default–would trigger an "economic catastrophe" that would send interest rates higher for years to come, per Reuters.

While portraying the mood, Wall Street closed in the red and the US Treasury bond yields were down too, which in turn allowed the US Dollar Index (DXY) to snap a three-day downtrend.

It’s worth noting that the mixed US data failed to prod the DXY buyers. That said, US Conference Board's Consumer Confidence Index edged lower to 101.3 for April, versus 104.0 prior and  Additional details of the publication stated that the Present Situation Index ticked up to 151.1 during the said month from 148.9 prior whereas the Consumer Expectations Index dropped to 68.1 from 74 previous readings. Further, the one-year consumer inflation expectations eased to 6.2% in April from 6.3% in March. In a different release, the US New Home Sales rose to 0.683M MoM in March versus 0.634 expected and 0.623M revised prior while the S&P/Case-Shiller Home Price Indices and Housing Price Index both rose past market forecast to 0.4% and 0.5% respectively for February.

Moving ahead, US Durable Goods Orders for March will be important to watch as it offers clues for Thursday’s US Gross Domestic Product (GDP) for the first quarter (Q1). Should the scheduled data offer a downbeat print, versus 0.8% expected and -1.0% prior, the US Dollar Index may consolidate recent gains.

Technical analysis

Despite the latest rebound, the US Dollar Index (DXY) remains below the 101.90 resistance confluence, comprising 21-DMA and a three-week-old descending resistance line, which in turn keeps the DXY bears hopeful.