The buck has been advancing north for the fourth consecutive day
The USD index extends its advance on Monday, accelerating the ascent after a break above the 99.00 figure. The prices climbed to the 99.25 area, targeting long-term tops registered at 99.40 earlier this month. The buck has been advancing north for the fourth consecutive day. As such, the greenback is now retargeting the 100.00 psychological level that could be challenged in the coming weeks of even days.
The US currency is well supported by the hawkish Fed comments and speculations on multiple 50bp rate hikes this year. The dollar is also benefitting from risk-aversion that prevails in the global financial markets. Meanwhile, US Treasury yields are now holding around multi-month highs, adding to a more upbeat tone surrounding the buck. The US 10-year Treasury yield climbed past 2.5%. Furthermore, the Treasury curve has inverted for the first time since 2006 (the yield on the 5-year note rose above that on the 30-year bond). The latest lockdown in Shanghai amid rising COVID-19 cases also plays into USD bulls’ hands.
Meanwhile, Ukraine and Russia negotiators said to begin talks in Istanbul later today. On the one hand, the talks could somehow cap the USD’s safe-haven appeal should both sides report a progress in negotiations. However, as Ukrainian President Volodymyr Zelensky insisted on the territorial integrity of his country, it looks like investors shouldn’t bet on any progress towards peace just yet.
As such, the USD index could challenge the mentioned highs around 99.40, followed by the 99.90 intermediate barrier that represents the last line of defense ahead of the 100.00 round figure. In case of a downside correction, the immediate support should be expected around the 99.00 mark, followed by the 98.80 zone that capped the downside pressure ahead of the weekend.