As Yields Approach 3%, the US Dollar Index Pursues Establishment Above 101.00

In early Tokyo, the US dollar index (DXY) is auctioning in a narrow range of 100.094-101.03. The asset is establishing a base before breaking through the 101.00 barrier, as the DXY has been bolstered by rising estimates of interest rates reaching 3.5 percent by the end of fiscal year 2022.

Fed Policymakers' Addresses

President James Bullard of the Federal Reserve Bank of St. Louis (Fed) opened the door on Monday for the Fed to boost interest rates 75 basis points (bps) in its May monetary policy statement. The likelihood of a massive interest rate hike has increased following the US economy's March inflation reading of 8.5 percent.

Meanwhile, Chicago Fed President Charles Evans stated on Tuesday that he is "comfortable" with a rate hike cycle this year that includes two 50 basis point increases and reaches a neutral level by year's end, but he does not see the need for further hikes, according to Reuters.

US Treasury Yields Increase Significantly

For the first time in three years, 10-year US Treasury yields are attempting to breach the psychological level of 3%. Rising wagers on a prolonged era of low interest rates are boosting yields, which eventually drive the greenback higher.

This week's significant events include the issuance of building permits, housing starts, initial jobless claims, and the S&P Global PMI.

On the back burner are the Russia-Ukraine Peace Talks, the International Monetary Fund (IMF) meeting, the People's Bank of China (PBOC) interest rate decision, the Federal Reserve Chair Jerome Powell's speech, the European Central Bank (ECB) President Christine Lagarde's speech, and the Bank of England's (BOE) Governor Andrew Bailey's speech.

Spot Dollar Index