Dollar Index holds at 7-week high as Fed doves turn hawkish

The Dollar Index holds around 7-week high of 101.97 in Asia as even the most dovish Fed officials see scope for a rate hike soon. 

Fed’s Brainard, a renowned dove, during her speech earlier today said a rate hike will likely be appropriate soon, given improved global conditions and continued growth. Her hawkish tilt carries more weight, given that Brainard is a renowned dove. 

The demand for the USD spiked on Wednesday after Fed’s William Dudley said the case for rate hike has become ‘a lot more compelling’. The 2-yr Treasury note, which mimics short-term rate hike/inflation expectations was crushed, sending the yield higher to 1.304%; its highest level since December 2016. 

The data docket is thinner today, thus focus remains on the 2-year treasury yield. 

Dollar Index Technical Levels

A break above 102.05 (Nov 24 high) would expose 102.52 (Jan 9 high), above which the psychological level of 103.00 could be put to test. On the other hand, a breakdown of support at 101.76 (Feb 15 low) could yield a pullback to 101.23 (previous day’s low) and 101.00 (zero levels).