US Dollar Index regains composure above 98.00 ahead of CPI

• DXY bounces off recent lows in the sub-98.00 region.
• US yields correct a tad lower from recent highs.
• US inflation tracked by the CPI, ECB next of relevance in the docket.

The greenback, in terms of the US Dollar Index (DXY), manages to regain some buying interest and retakes the 98.00 hurdle and above on Thursday.

US Dollar Index looks to data, geopolitics

Following the strong decline recorded on Wednesday, the index now picks up some pace and embarks on a tepid recovery against the backdrop of the so far absence of news from the geopolitical scenario.

US yields, in the meantime, reflects the slight bias towards the risk aversion and edge a bit lower after reaching new highs on Wednesday.

In the US calendar, all the attention will be on the release of February inflation figures tracked by the CPI, while investors will also closely follow the ECB meeting.

What to look for around USD

The index reclaims some ground lost in the previous session after bottoming out in the sub-98.00 levels, while closely following the developments from the geopolitical scenario in Ukraine. The persevering bias towards the safe haven universe is predicted to keep supporting the dollar and the rest of its peers in the current context for the time being. Also supportive of the stronger buck appears the current elevated inflation narrative, the start of the Fed’s normalization of its monetary conditions later this month and the solid performance of the US economy.

Key events in the US this week: CPI, Core CPI, Initial Claims, Monthly Budget Statement, Fed Quarterly Financial Accounts (Thursday) – Flash Consumer Sentiment (Friday).

Eminent issues on the back boiler: Escalating geopolitical effervescence vs. Russia and China. Fed’s rate path this year. US-China trade conflict under the Biden administration.

US Dollar Index relevant levels

Now, the index is up 0.29% at 98.28 and a break above 99.41 (2022 high Mar.7) would open the door to 99.97 (high May 25 2020) and finally 100.00 (psychological mark). On the flip side, the next down barrier emerges at 97.85 (weekly low Mar.9) followed by 97.73 (monthly high Feb.24) and then 96.29 (55-day SMA).