• US Dollar Index picks up bids to refresh intraday high, defends the previous day’s recovery.
• Fed policymakers defend “higher for longer” rate bias and propel yields.
• Geopolitical fears underpin US Dollar’s haven demand and propel DXY.
• Second-tier US data, risk catalysts eyed amid jittery markets.

US Dollar Index (DXY) picks up bids to reverse the late Wednesday’s pullback moves, as well as renew intraday high around 102.00, amid the early hours of Thursday’s Asian session. In doing so, the greenback’s gauge versus the six major currencies cheers hawkish concerns about the Federal Reserve (Fed), as well as geopolitical fears, after a volatile day.

Recently, New York Fed President John Williams marked support for 0.25% interest rate hike in May while saying, “Inflation is still too high, and we will use our monetary policy tools to restore price stability.”

Just before him was Chicago Federal Reserve Bank President Austan Goolsbee who highlighted credit market strength as one of the key catalysts to watch ahead of the next Fed monetary policy meeting.

Previously, St. Louis Federal Reserve President James Bullard, Richmond Fed President Thomas Barkin and Atlanta Fed President Raphael W. Bostic were the Fed speakers who rekindled the “higher for longer” scenario for rates and favored the US Dollar, as well as yields.

It should be noted that the recently firmer US data and hawkish Fed talks favor the market’s bets on the central bank’s 0.25% rate hike in May, as well as reduce the probability of witnessing a rate cut in 2023. The same joins the inflation and rate hike fears from the other major central banks to propel the US Dollar’s haven demand.

On the same line could be the war fears emanating from China and Russia, not to forget the fears of recession.

On Wednesday, Reuters came out with the news suggesting that US consumers are starting to fall behind on their credit card and loan payments as the economy softens.

Elsewhere, UK’s warned Russian hackers targeting Western critical infrastructure while the US House China Committee discussed the Taiwan invasion scenario. Furthermore, the likely drag on the US debt ceiling decision is due to US President Joe Biden’s hesitance in lifting debt limits. Additionally, Bloomberg released news suggesting China’s role in the Russia-Ukraine war, which in turn adds strength to the risk-off mood.

Against this backdrop, Wall Street closed mixed but the top-tier US Treasury bond yields refreshed monthly high and allowed the US Dollar to remain firmer.

Moving ahead, risk catalysts are key to watch for clear directions but central bankers’ speeches and second-tier US data should also not be ignored for fresh impulse.

Technical analysis

Despite the US Dollar Index’s corrective bounce off 100.80 double bottoms, the 21-DMA and a one-month-old resistance line, respectively near 102.15 and 102.35, challenge the DXY recovery before welcoming bulls.