US Dollar inter-markets: focus back on 100.00

The greenback, when gauged by the US Dollar Index, is trading on the defensive in the middle of the week, easing some ground after advancing for two straight sessions and bouncing off Monday’s fresh YTD lows in the 98.30 region.

DXY managed to regain and surpass the key area around the 99.00 handle, where sit the 200-day sma and the critical 12-month support line, and at the same time it has filled the gap lower seen on April 24^th in the wake of the Macron’s win at the first round of the French elections.

The buck stays so far supported by the solid pick up in US yields, with the 10-year benchmark retaking the 2.41% area on Tuesday (monthly peaks), although fading part of the spike today to the 2.38% region at the time of writing.

Adding to positive prospects surrounding USD, the probability of a rate hike by the Federal Reserve is currently at just above 83%, according to CME Group’s FedWatch tool and based on Fed Funds future prices.

That said, the constructive outlook stays alive while above the 12-month support line. In addition, supportive Fedspeak, solid US fundamentals, the prospect of further tightening and a reduction of the Fed’s balance sheet should all contribute to the case for a stronger USD in the next months, eyeing the interim target at the psychological 100.00 the figure.