US Dollar Index crosses 99.00 to refresh 22-month high as hawkish Fed, upbeat US NFP join Ukraine jitters

• DXY begins trading week with an upside gap to renew multi-day top.
• US jobs report for February marked upbeat NFP, Unemployment while also taming inflation fears of the Fed.
• Fed’s Evans terms raising rates as “more than essential”.
• Russian invasion disturbs Ukraine evacuation, markets fear more drama ahead.

US Dollar Index (DXY) cheers the traditional safe-haven status around 99.10, the highest levels since May 2020, as Ukraine-Russia tussles intensify. That said, the quote began the week’s trading with an upside gap to refresh multi-day high, up 0.63% intraday around 99.11 by the press time of Monday’s Asian session.

In addition to the Ukraine-linked market fears, the greenback gauge also benefits from the recently firmer US jobs report for February and hawkish comments from Chicago Fed President and FOMC member Charles Evans.

The latest headlines concerning the Kyiv-Moscow tussles came from US House Speaker Nancy Pelosi who said, “House is "exploring" legislation to ban the import of Russian oil.” Earlier in the day, UK Defense Chief Admiral Sir Tony Radakin believed, per The Times, “Russia could ‘turn up the violence’ with ‘more indiscriminate killing and more indiscriminate violence’ in response to resistance.”

Additionally, comments from Japan Prime Minister Fumio Kishida who said, “China and Russia are increasing their military collaboration,” per Reuters, joined news of the further invasion of Moscow towards Kyiv to weigh on the sentiment and propel the DXY.

As per the latest US jobs report for February, the headline Nonfarm Payrolls (NFP) rose by 678K, well above the median forecast of a 400K figure and upwardly revised 484K prior. On the same line, the Unemployment Rate dropped to 3.8% versus 4.0% previous readings and 3.9% expected. It’s worth noting that the inflation-concerned Fed also had a reason to like the February employment report as the Average Hourly Earnings (AHE) rose 5.1% YoY versus market consensus of 5.8% and the revised down 5.5% figure for January.

Following the data, Fed’s Evans said, “The U.S. central bank is on track to raising rates this year, though it may be ‘more than I think is essential to do so at every policy-setting meeting.”

Amid these plays, S&P 500 Futures drop 1.60% whereas the US 10-year Treasury yields drop 2.5 basis points (bps) to 1.69% at the latest. On the same line was Japan’s Nikkei 225 that prints over 3.0% daily loss to poke the lowest levels last seen during November 2020.

Looking forward, this week’s US Consumer Price Index (CPI) for February and the ECB monetary policy meeting is the key events to follow for fresh impulse. However, major attention will be given to Russia-Ukraine headlines.

Technical analysis

With the sustained trading beyond 61.8% Fibonacci retracement (Fibo.) of March 2020 to January 2021 downside, near 97.75, the US Dollar Index is well directed towards the 100.00 psychological magnet, also comprising 61.8% Fibo.