US dollar falls to 4-week lows near the 104 level. US dollar Declines due to SVB Impact Fed and finance department snitching

US dollar index surpasses 104.00 under intense selling pressure

The greenback, in terms of the USD Index (DXY), continues on the decline and breaches just below 104.00 support for the first time since mid-Feb.

The greenback, in terms of the USD Index (DXY), continues on the decline and breaches just below 104.00 support for the first time since mid-February.

Over the weekend, Signature Bank also entered bankruptcy. But the Federal Reserve and the US Treasury Department acted quickly to offer a safety net to prevent a chain reaction.

But today, everything is under examination, including Argentinian bonds, Asian tech firms, and credit default swaps.

US dollar declines before US CPI

As investors continue to revalue the likelihood of the Federal Reserve raising interest rates at its next meeting. The index declines for the third session in a run and breaches the 104.00 level at the start of the week.

The dollar continued to decline after Friday’s conflicting Non-Farm Payrolls results as expectations for a 25 basis point rate hike increased. The Silicon Valley Bank (SVB) problem also did not help the dollar’s position.

The release of the Feb CPI inflation data is due on Tuesday. It is expected to continue to draw attention in the absence of any releases in the US data area on Monday.

The SVB saga has altered the bets

Prior to the FOMC meeting on March 22nd of next week. The SVB episode has altered the outlook for rates moving forward. The SVB episode has altered the outlook for rates moving forward.

The Fed has entered a quiet phase, which makes things more difficult because trustees won’t be able to speak publicly until after the meeting.

Strong US employment figures from Friday were overshadowed by a minor banking problem. The US CPI data from Tuesday may not have the same effect on the FOMC meeting as it once did.

The US T- yields in focus

Treasury rates have plummeted, and if they keep falling, the US dollar may suffer even more damage.

The yield on the 2-year note has dropped by about 70 basis points since peaking at 5.08 percent the week before, which had been the highest level as of July 2007.

Treasury yields might be supported, however, if authorities are effective in containing contagion risks.

Forecasts for the Fed funds target rate’s final rate have decreased from roughly 5.70 percent last week to roughly 5.13 percent right now. Only -75 bps, and more than 30 bps, of the 2s 10s yield curve, is reversed today.

What to watch out for about USD

The indicator continues to fall faster and makes its first return to the sub-104.00 area in many weeks.

the corrective drop in the USD Index (DXY) from last week’s 2023 highs in the boundaries of the 106.00 regions. The most recent US jobs report results to continue to put pressure on the dollar. Working in tandem with investors’ repricing of a 25 bps rate increase at the March gathering.

The index has so far completely faded the sharp post-Powell recovery against the background of resurgent forecasts on a Fed. However, the resilient US economy and the still rising inflation rate keep working against that perspective.

Relevant USD Index values

The indicator is currently declining by 0.70% at 103.89. A break of 103.68 (the monthly would allow access to 103.51 (the 55-day SMA) and then 102.58.  The next upward hurdle, however, lines up at 105.88 (2023 high March 8). Followed by 106.62 (200-day SMA), and finally 107.19. (weekly high Nov 30, 2022).