The U.S. Dollar Index rose for the fourth consecutive day on Tuesday, having hit its highest level in over two years above 101.00 during the New York session. The U.S. currency continues to appreciate versus its major rivals, underpinned by a stunning rally seen in Treasury yields across the curve.
The expectations of the Federal Reserve switching to more aggressive monetary tightening have been pushing yields and the dollar up. The yield on the United States 10-Year note reached a high of 2.928%, while the one on the 30-Year bond surpassed 3% and hit 3.016%, its highest level since March 2019, before retreating slightly.
In addition, the deterioration of the geopolitical situation after Russia invaded Ukraine, the economic toll new lockdowns in China could take on economic growth, and the robust performance of the U.S. economy are supporting the greenback amid safe-haven demand.
From a technical perspective, the DXY holds a clear bullish bias, with indicators gaining bullish slopes in the daily chart while the price remains above its main moving averages. Furthermore, an ascending trendline from May 2021 lows confirms the positive perspective and offers critical support to the DXY.
However, the RSI has already reached overbought levels, which could give way to a phase of consolidation before another leg higher. A decisive break above the 101.00 area could see the index reaching the 2020 high of 102.99, with the 101.80-102.00 area offering interim resistance.
On the other hand, short-term support is seen at 100.00, followed by the 20-day SMA at 99.45. The ascending trend line provides a more significant level, currently at the 96.70 area.
