- DXY looks to add to the recent breakout of the 100.00 mark.
- Risk-off prevails on concerns over a second wave of coronavirus.
- NFIB index, Fedspeak, CPI figures next of relevance in the docket.
The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main competitors, is clinging to its daily gains near 100.30 on Tuesday.
US Dollar Index looks to data, COVID-19
The index has tested the key barrier in the mid-100.00s during early trade, losing some upside impetus soon afterwards, although keeping the bid bias unchanged ahead of the opening bell in Euroland.
The sentiment around the dollar remains bolstered in the second half of the week on the back of renewed concerns over a potential second wave of the coronavirus after infected cases increased in South Korea, China and Germany.
In addition, there still persist doubts regarding the gradual re-opening of the US economy, which is also favouring the demand for the buck and US bonds.
Later in the docket, inflation figures tracked by the CPI will be in the limelight seconded by the NFIB index, the Monthly Budget Statement and the API report. Additionally, speeches by St. Louis Fed J.Bullard (2022 voter, dovish), Minneapolis Fed N.Kashkari (voter, dovish), FOMC’s R.Quarles (permanent voter, centrist), Philly Fed P.Harker (voter, hawkish) and Cleveland Fed L.Mester (voter, hawkish) are all due later on Tuesday.
What to look for around USD
The greenback has started the week on a strong footing, regaining the 100.00 barrier and above while being propped up by renewed sentiment towards the safe haven universe. In the meantime, investors have now shifted the attention to the US-China trade war, while keep monitoring the gradual re-opening of the economy. Supporting the momentum around the greenback emerges the current “flight-to-safety” environment, helped by its status of “global reserve currency” and store of value. On another front, and following the FOMC event, the Fed is expected to stay on the loose end of the monetary policy stance, at least until the coronavirus crisis abates.
US Dollar Index relevant levels
At the moment, the index is gaining 0.02% at 100.24 and a break above 100.44 (weekly high May 12) would open the door to 100.49 (78.6% Fibo of the 2017-2018 drop) and finally 100.93 (weekly/monthly high Apr.6). On the flip side, the next support lines up at 98.57 (weekly low May 4) followed by 98.40 (200-day SMA) and then 97.87 (61.8% Fibo of the 2017-2018 drop).
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