US Dollar probing highs near 101.80, US data eyed

The greenback – when tracked by the US Dollar Index – keeps its bullish note well and sound on Wednesday, currently testing the critical resistance area around 101.70/80.

US Dollar up on rate hike hopes

The index is advancing for the fourth straight session so far today, flirting at the same time with the area of 7-week tops around 101.70 amidst a renewed buying impetus around the buck, all in response to a pick up of the probability of a Fed’s rate hike at its March meeting.

The likeliness of the Fed tightening its monetary conditions later this month has been boosted by recent auspicious comments by several FOMC governors. In fact, Dallas Fed R.Kaplan (voter, hawkish) argued the Fed should start removing policy accommodation while he noted the next hike should take place ‘in the near future’. In the same line, Philly Fed P.Harker (voter, hawkish) sees three rate hikes this year as appropriate as long as data remains on current track, while New York Fed W.Dudley (permanent voter, centrist) said the case for further tightening is compelling.

Yields in US money markets have reverted the recent drop following the supportive Fedspeak and the positive message from Trump’s SOTU speech on Tuesday, accompanying and sustaining the up move in the index.

Later in the NA session, the greenback should stay in centre stage in light of the publications of February’s, US ISM Manufacturing, Personal Income/Spending, January’s inflation gauged by the PCE, Markit’s Manufacturing PMI and the speech by Dallas Fed R.Kaplan (voter, hawkish). Closing the docket, the Fed will publish its Beige Book.

US Dollar relevant levels

The index is advancing 0.41% at 101.75 facing the next up barrier at 101.95 (23.6% Fibo of the November-January up move) followed by 102.96 (high Jan.11) and finally 103.81 (2017 high Jan.3). On the downside, a breach of 101.22 (low Mar.1) would open the door to 100.79 (20-day sma) and then 100.64 (low Feb.24).