US Dollar Index advances to new cycle tops near 100.50

• DXY’s rally now flirts with the 100.50 region midweek.
• US yields resume the upside following Tuesday’s correction.
• Mortgage Applications, Producer Prices next on tap in the docket.

The US Dollar Index (DXY), which measures the strength of the dollar in relation to its key rivals, continues to rise and is trading at the 100.50 level on Wednesday.

US Dollar Index in levels last seen in May 2020

For the ninth session in a row, the index is in the green, and it's navigating a range that was last seen in May 2020 in the mid-100.00s, which is always accompanied by greater predictions of stricter normalization by the Federal Reserve in the coming months.

On the latter, T.Barkin of the Richmond Fed argued for a faster transition to neutral rates, while J.Bullard of the St. Louis Fed argued that neutral rates are inadequate to drive inflation down.

In the meanwhile, rates in the US cash markets have resumed their upward trend after falling on Tuesday after the release of US inflation numbers that showed the country's inflation rising at the quickest rate since 1981 in March. Despite the increase in consumer prices, investors seem to be beginning to believe that inflationary forces may be losing some impetus and that the peak may be approaching.

Weekly Mortgage Applications, as recorded by MBA, are expected in the first week of March, followed by Producer Prices for the month of March, in the data area of the United States

What to look for around USD

The dollar's advance north of the 100.00 mark has taken it to levels last seen almost two years ago, according to market analysts. So far, the price of the greenback has been controlled by the likelihood of a tighter rate path from the Federal Reserve, as well as geopolitical events. In addition, the present rising inflation story, higher US rates, and the good performance of the US economy all serve to support the argument for a stronger dollar in the long run.

There are several important events in the United States this week, including MBA Mortgage Applications and Producer Prices (on Wednesday), Retail Sales, Initial Claims, Business Inventories, and Flash Consumer Sentiment (on Thursday), Industrial Production, and Trade in Commodities Flows (on Friday) (Friday).

On the back burner are a number of important topics, including the escalation of geopolitical effervescence between Russia and China. The Federal Reserve's rate plan for this year. Trade tensions between the United States and China. The long-term viability of Biden's Build Back Better initiative.

US Dollar Index relevant levels

To be specific: now, the index is gaining by 0.19 percent at 100.50, and a break over 100.55 (monthly peak on May 14 2020) would target 100.86 (monthly peak on April 24 2020) and eventually, 100.93 (monthly peak on May 14 2020). (monthly high April 11 2020). On the downside, first support is expected around 97.68 (weekly low on March 30), followed by 96.94 (100-day simple moving average), and then 95.67 (100-day SMA) (weekly low February 16).