• The index looks to extend the breakout of 103.00.
• Markets continue to digest Friday’s strong US Payrolls.
• 3-month/6-month bill Auctions will be the only event in the docket.

The greenback advances modestly around 103.00 mark when tracked by the USD Index (DXY) ahead of the opening bell in the old continent on Monday.

USD Index remains bid following NFP

The index trades in a positive fashion for the third session in a row and hovers around the key 103.00 region at the beginning of the week.

Indeed, the dollar appears on the bid side as market participants continue to assess Friday’s stellar prints from US Nonfarm Payrolls (+517K), while speculation of a tighter-for-longer stance from the Federal Reserve remains on the rise.

Nothing noteworthy in the US docket, with only a a couple of short-term bill auctions scheduled for later in the NA session.

What to look for around USD

The dollar clings to the area of recent highs around the 103.00 zone in the wake of Friday’s release of unexpectedly strong US Payrolls for the month of January.

The idea of a probable pivot/impasse in the Fed’s normalization process now looks mitigated in favour of a tighter-for-longer narrative, which appears almost exclusively underpinned by the recent NFP prints.

The loss of traction in wage inflation, however, seems to lend some support to the view that the Fed’s tightening cycle have started to impact on the robust US labour markets somewhat.

Key events in the US this week: Balance of Trade, Fed Powell, Consumer Credit Change (Tuesday) – MAB Mortgage Applications, Wholesale Inventories (Wednesday) – Initial Jobless Claims (Thursday) – Flash Consumer Sentiment (Friday).

Eminent issues on the back boiler: Rising conviction of a soft landing of the US economy. Slower pace of interest rate hikes by the Federal Reserve vs. shrinking odds for a recession in the next months. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is gaining 0.11% at 103.10 and faces the next up barrier at 103.87 (55-day SMA) seconded by 105.63 (2023 high January 6) and then 106.45 (200-day SMA). On the downside, the breach of 100.82 (2023 low February 2) would open the door to 100.00 (psychological level) and finally 99.81 (weekly low April 21 2022).