USD Index Targets Nearly Two-Year Highs Around 100.00

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The buying interest around the dollar has intensified at the end of the week. This pushed the USD index to 98.60 during the European trading hours in a knee-jerk reaction to fresh economic data out of the United States. The report showed that the US economy created 678,000 jobs last month February, exceeding expectations for a gain of 400,000 jobs, while the previous reading was revised slightly higher. Furthermore, the jobless rate eased to 3.8% and the participation rate improved to 62.3%.

Much stronger-than-expected figures added to the bullish tone surrounding the greenback that has been well supported by safe-haven demand since the start of geopolitical tensions in Ukraine. It looks like there is scope for the continuation of the uptrend in the near term, as relations between Russia and Ukraine keep deteriorating. Earlier in the day, Ukraine said it will not announce the date and time of new talks with Russia in advance. Global stock markets stay pressured ahead of the weekend, with the overall situation looking gloomy. 

Now that the dollar index has settled above 98.00, challenging the 98.85 zone, the prices could target the 100.00 psychological level last seen in April 2020. The greenback could challenge this critical barrier in the coming days or weeks if the geopolitical landscape deteriorates further. In the immediate term, the buck needs to derail the 99.00 mark, followed by the 99.40 next barrier for bulls. On the downside, the nearest support lies at 98.30. 

Later this month, the USD could add to gains should the Federal Reserve start hiking rates and express a hawkish tone in the context of its further steps towards slower inflation. Of note, Fed’s Powell said on Thursday that after a careful hike in March, the central bank would be ready to move more aggressively if inflation does not cool as quickly as expected.