US DOLLAR INDEX: DXY TRACES DOWNBEAT YIELDS ABOVE 101.00 AS TRADERS BRACE FOR US GDP, FED

US Dollar Index (DXY) remains depressed near 101.30 as it drops for the fourth consecutive day amid early hours of Tuesday’s Asian session. In doing so, the greenback index against the major six currencies track the downbeat US Treasury bond yields as traders prepare for dovish Federal Reserve (Fed) and downbeat US data.

Fears of US reaching its debt limit expiration in June and a political drama ahead of that keeps traders on their toes and pushes them towards the risk-safety, which in turn propelled the demand for one-month US Treasury bond yields. On the same line, are the clues that the US Federal Reserve (Fed) could announced one last rate hike, worth 0.25%, in May before signaling the policy pivot.

The same joins Monday’s downbeat performance of April month activity data from the Federal Reserve banks of Chicago and Dallas. That said, the Federal Reserve Bank of Chicago's National Activity Index (CFNAI) remained unchanged at -0.19 versus -0.02 expected. However, the publication added that the index’s three-month moving average, CFNAI-MA3, increased to 0.01 in March from –0.09 in February. On the other hand, Dallas Fed Manufacturing Business Index for the said month dropped to 23.4 for April versus -14.6 expected and -15.7 prior.

Furthermore, hopes of gradual economic recovery and upbeat earnings season allow the US Dollar bears to stay hopeful.

Alternatively, geopolitical fears surrounding Russia, due to China’s alleged support to Moscow in fighting with Ukraine, as well as amid the Western readiness to increase sanctions on the Oil-rich nation, prod the market’s cautious optimism and prod the DXY bears.

Against this backdrop, Wall Street closed mixed and the US 10-year Treasury bond yields marked the biggest daily fall in three weeks before closing the day around 3.50%.

Moving on, US Conference Board’s (CB) Consumer Confidence gauge for April, expected to remain steady near 104.1 versus 104.2 prior, will be important for the intraday directions of the DXY. However, major attention will be given to US Q1 GDP, US Core PCE Price Index and the yields for a clear guide.