The US Dollar Index (DXY) could extend its recent retracement if a more favourable Russia-Ukraine diplomatic backdrop continues to develop. Nonetheless, weakness is unlikely to extend beyond the mid-96s, according to economists at Westpac.

Fed likely to stay on a hawkish path

“DXY could extend its recent retracement if a more favourable Russia-Ukraine diplomatic backdrop continues to develop, though weakness likely does not extend beyond the mid-96s, the Fed likely to stay on a hawkish path.”

“100+ for DXY looks more likely than not in coming weeks.”