US Dollar clings to gains above 90.00, Fedspeak eyed

• DXY managed to break above the 90.00 mark post-FOMC.
• US 10-year yields climbed to multi-year tops near 2.96%.
• USD vigilant on ECB minutes and Fedspeak later today.

The greenback, in terms of the US Dollar Index (DXY), keeps the upbeat mood so far this week and is now looking to consolidate the break above the psychological 90.00 handle.

US Dollar attention to Fedspeak

The index is up for the fifth consecutive session so far on Thursday although it is currently facing some selling pressure in response to the recent breakout of the critical 90.00 barrier.

DXY found some extra oxygen following another fresh multi-year high in yields of the key US 10-year reference on Wednesday, climbing to the 2.96% area in the wake of the FOMC minutes.

In this regard, the buck stays supported by the somewhat hawkish message from the Committee yesterday, which gave an upbeat assessment of the economy and still expects US consumer prices to clinch the Fed’s 2% target.

Regarding the rate path, the Federal Reserve stays on the way to tighten further its monetary conditions this year, with the next rate hike expected to come as soon as the March meeting. However, it seems the buck will need a deeper change in sentiment in order to not only extend gains but also to shift to a bullish trend. In this regard, next week’s testimony by Chief J.Powell before Congress could be key.

Talking about a rate hike next month, CME Group’s FedWatch tool now sees the probability of this scenario now at 84.5%, based on Fed Funds futures prices.

In the US data space, the usual weekly report on the labour market is due next along with speeches by New York Fed and permanent voter W.Dudley (centrist), Dallas Fed R.Kaplan (non voter, hawkish) and Atlanta Fed R.Bostic (voter, centrist).

US Dollar relevant levels

As of writing the index is up 0.07% at 90.16 and a break above 90.57 (high Feb.8) would aim for 91.00 (high Jan.18) and then 91.22 (55-day sma). On the flip side, the immediate support aligns at 88.26 (2018 low Feb.16) seconded by 88.14 (200-month sma) and finally 86.89 (support line off 72.70).