The US Dollar Index (DXY) hit a fresh two-year high on Friday at 100.00, as the greenback remains underpinned by persistent tensions in Eastern Europe and soaring US Treasury yields.
A hawkish stance from the Federal Reserve and the search for safety flows maintain US yields, and the dollar is underpinned. The minutes from the last Fed’s meeting published on Wednesday showed many members support a 50 basis points rate hike for the upcoming meetings as the employment remains solid and inflation does not give signs of receding.
The DXY, which measures the US dollar against a basket of currencies, has advanced for the seventh consecutive session, hitting its highest level since May 2020 before easing somewhat. At the time of writing, the Index is trading around 99.95, posting a 1.4% weekly gain.
From a technical perspective, the DXY keeps a bullish bias according to indicators in the daily chart. The price holds near cycle highs and well above its main moving averages, while the MACD signals increasing bullish momentum. At the same time, the RSI is close but has not reached overbought levels yet, leaving room for another leg higher on a break above the 100.00 psychological level.
If DXY bulls break decisively above 100.00, they will target the next resistance at 100.55, the monthly high on May 14, 2020, followed by 100.87, Apr. 24 2020 high.
On the other hand, corrective movements should find immediate support at the 20-day SMA around 98.80. A break below the latter could lead toward a $ 97.68 March monthly low and then the $ 97.00 zone. Still, the short-term dominant bias will remain bullish as long as the DXY holds above an ascendant trendline coming from May 2021 low, currently around 96.50.
