US Dollar reaches fresh highs near 101.40 on Yellen

The US Dollar Index (DXY) – which gauges the buck vs. its main rivals – has jumped to daily highs near 101.40 in response to Yellen’s hawkish message at the semi annual testimony before the Senate Banking Committee.

US Dollar in 4-week highs

The index has quickly climbed to fresh multi-week tops after Chairwoman J.Yellen reinforced the view of several rate hikes this year, adding that it would be ‘unwise’ to wait too long to hike. Yellen also added that changes in fiscal policy could also affect the US economic outlook.

In addition, Richmond Fed J.Lacker said the economy may need more than three rate hikes this year, also leaving the door open for a rate hike in March.

Yellen’s testimony rapidly lifted yields in the US money markets, with the 2-year around 1.25%, the 5-year near 1.99% and the key 10-year hovering over the critical 2.50% level.

US Dollar relevant levels

The index is gaining 0.35% at 101.35 and a breakout of 101.71 (high Jan.19) would target 101.95 (23.6% Fibo of the November-January up move) en route to 102.96 (high Jan.11). On the flip side, the next support lines up at 100.56 (low Feb.10) followed by 100.34 (20-day sma) and then 100.03 (low Feb.8).