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U.S. Dollar Higher On Hopes Of Aggressive Fed Tightening

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The U.S. dollar firmed against its major counterparts in the European session on Monday, as U.S. treasury yields spiked up amid growing expectations that the Federal Reserve will tighten monetary policy aggressively in the near future.

The treasury yield curve extended its inversion, with short-term rates rising above long-term rates, as investors are pricing in a tighter monetary policy in the months ahead.

The CME Group’s FedWatch is now penciling in 50 basis point rate hikes at the Fed’s next three meetings in May, June and July.

The U.S. jobs report released on Friday showed a solid job growth in March, with the unemployment rate falling to a new pandemic-era low.

The Fed’s minutes, due to be released on Wednesday, could offer more clues about the future path of rate hikes.

The likelihood of more sanctions against Russia for committing “war crimes” in Ukraine deteriorated risk sentiment and further underpinned the safe-haven currency.

The greenback appreciated to a 6-day high of 1.0996 against the euro and a 5-day high of 0.9281 against the franc, after falling to 1.1054 and 0.9242, respectively in early deals. The greenback may possibly challenge resistance around 1.08 against the euro and 0.94 against the franc.

The greenback edged up to 122.83 against the yen, from a low of 122.26 hit at 8:15 pm ET. On the upside, 124.00 is possibly seen as the next resistance level for the greenback.

The greenback rebounded to 1.3093 against the pound, following a decline to 1.3136 at 3 am ET. If the greenback rises further, it may likely seek resistance around the 1.28 level.

In contrast, the greenback weakened against the kiwi and was trading at a 4-day low of 0.6949. The greenback may test support around the 0.72 region, if it falls again.

The greenback slipped to 0.7523 against the aussie and 1.2485 against the loonie, off its previous highs of 0.7483 and 1.2529, respectively. The currency is poised to find support around 0.78 against the aussie and 1.21 against the loonie.

U.S. factory orders for February will be released in the New York session.

China’s Revised Delisting Rule Boosts Alibaba and Other Stocks. But Investors Should Consider Selling on the Rally.

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