The U.S. dollar index, which measures the value of the dollar against a basket of currencies, struck its highest level since 2002 at 104.18 on Monday as the greenback benefited from risk aversion and higher bond yields.
The DXY printed its third gain in a row and rose past 104.00 to hit its highest in nearly two decades before losing momentum during the New York session. At writing, the index is trading at the 103.70 area.
U.S. Treasury yields pushed higher and reached fresh highs. The yield on the United States 10-Year note reached a high of 3.203%, while the one on the 30-Year bond hit 3.309% before easing.
Solid U.S. nonfarm payrolls continue to support the Federal Reserve tightening cycle, which in turn remains a tailwind for the dollar. Key U.S. inflation data will be published on Wednesday, which is expected to show consumer prices rose 8.1% over the year to April and 6% when excluding food and energy, a tad slower than in March.
From a technical perspective, the DXY holds a bullish bias, according to the daily chart. Although the RSI and MACD remain in positive territory, they show a loss of momentum, favoring a consolidation phase and even a little downward correction.
In terms of technical levels, a breakout of the 104.18 level could expose the 105.00 psychological level and the December 11, 2002 high of 105.63. On the other hand, the immediate support is seen at the 103.00 area, followed by last week’s low of 102.35 and the 20-day SMA around 101.95.