USD Index looks to data, ECB meeting

The index trades on the defensive and retreats below the 105.00 mark after two consecutive daily gains amidst mitigated risk aversion and a small recovery in US yields across the curve.

In the meantime, investors’ concerns around the banking system looks somewhat alleviated after Credit Suisse announced it will borrow CHF 50B from the Swiss National Bank (SNB), although the cautious stance still prevails ahead of the key interest rate decision by the European Central Bank (ECB) due later in the afternoon in the old continent.

In the US data space, usual weekly Initial Claims are due seconded by the Philly Fed Manufacturing Index, Building Permits and Housing Starts.

What to look for around USD

The index comes under pressure after hitting fresh tops past the 105.00 mark on Wednesday.

The risk aversion derived from banking jitters appears somewhat diminished and supports some selling pressure in the dollar amidst firmer conviction among investors of a 25 bps rate hike by the Federal Reserve at the March 22 meeting.

So far, the index remains under pressure against the backdrop of reinvigorated bets of a Fed’s pivot in the short-term horizon. However, the still elevated inflation and the resilience of the US economy continue to play against that view.