Even though the USD funding markets have calmed down a little, the dollar remains very much in demand. On Tuesday and the US Dollar Index gained 0.7%. Economists at ING expect DXY to test the next resistance at 97.70/98.
Powell testimony could drive a further wedge between the dollar and European FX
“The macro dent from Putin's war will clearly cost Europe far more heavily than the US. Indeed, pressure is building for European leaders to bite the bullet and start curtailing Russia's oil and gas imports in spite of the economic cost.”
“FOMC Chair Powell delivers semi-annual testimony to the Senate today. As long as he continues to focus on the inflationary threats expect Fed tightening expectations to remain broadly intact and the dollar supported.”
“Expect war in Europe to keep the dollar bid and DXY pressing the next layer of resistance at 97.70/98.00.”
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