US Dollar firmer, eyes on 102.00

The US Dollar Index – which tracks the buck vs. its main competitors – remains on a firm note so far this week, currently testing fresh highs in the boundaries of 102.00 the figure.

US Dollar stronger on rate hike bets

The index is approaching the critical barrier at the 102.00 handle, always backed by the solid performance of yields in the US money markets which in turn stay sustained by increasing expectations of a rate hike by the Federal Reserve later in the month.

US yields have rebounded sharply in response to hawkish comments from Fed speakers as of late, advocating for further tightening by the Fed sooner than later, with the likelihood of a 25 bp rate hike at the March meeting gathering extra steam in recent sessions.

Based on Fed Funds futures prices, CME Group’s FedWatch tool places the probability of higher rates as soon as this month at nearly 67%, almost doubling the chances from the previous day.

In addition, recent auspicious results from the US docket have been also adding to the case for higher rates and a stronger greenback. Market participants have deemed Trump’s SOTU speech as positive and it has alleviated some concerns among USD-bulls, although uncertainty over his future announcements on fiscal stimulus and tax reforms still linger.

Looking ahead, Initial Claims is only expected in the US docket ahead of tomorrow’s ISM Non-manufacturing and the speech by Chief Janet Yellen on ‘Economic Outlook’.

US Dollar relevant levels

The index is advancing 0.17% at 101.91 facing the next up barrier at 102.00 (high Mar.2) followed by 102.96 (high Jan.11) and finally 103.81 (2017 high Jan.3). On the downside, a breach of 101.78 (low Mar.2) would open the door to 101.37 (55-day sma) and then 100.90 (20-day sma).