• DXY hovers around the area of recent highs near 100.50.
• US yields reverse the earlier positive start.
• US Producer Prices rose 1.4% MoM, 11.2% YoY in March.

The rally in the greenback gives no sign of exhaustion so far and lifts the US Dollar Index (DXY) to new peaks around 100.50 on Wednesday.

US Dollar Index stays supported by Fed, geopolitics

The index trades on a positive footing for the second week in a row so far and now looks to consolidate the recent breakout of the psychological 100.00 barrier.

Wednesday’s positive performance of the dollar comes despite US yields reversed the earlier optimism and resumed the downside, adding to Tuesday’s post-CPI retracement at the same time.

In the US data space, MBA Mortgage Applications contracted 1.3% in the week to April 8 and headline Producer Prices rose at a monthly 1.4% in March and 11.2% from a year earlier.

What to look for around USD

The dollar extends the march further north of the 100.00 mark to levels last seen nearly two years ago. So far, the greenback’s price action continues to be dictated by the likeliness of a tighter rate path by the Fed and geopolitics. In addition, the case for a stronger dollar remains well propped up by the current elevated inflation narrative, higher US yields and the solid performance of the US economy.

Key events in the US this week: MBA Mortgage Applications, Producer Prices (Wednesday) – Retail Sales, Initial Claims, Business Inventories, Flash Consumer Sentiment (Thursday) – Industrial Production, TIC Flows (Friday).

Eminent issues on the back boiler: Escalating geopolitical effervescence vs. Russia and China. Fed’s rate path this year. US-China trade conflict. Future of Biden’s Build Back Better plan.

US Dollar Index relevant levels

Now, the index is advancing 0.09% at 100.40 and a break above 100.55 (monthly high May 14 2020) would aim to 100.86 (high April 24 2020) and finally 100.93 (monthly high April 11 2020). On the downside, initial contention is seen at 97.68 (weekly low March 30) seconded by 96.94 (100-day SMA) and then 95.67 (weekly low February 16).