- DXY fades the recent uptick to the 97.60 region on Friday.
- Markets remain concerned over the unabated raise in COVID-19 cases.
- Powell and Fedspeak only of note in the US calendar.
The greenback, in terms of the US Dollar Index (DXY), is giving away part of its recent gains and returns to the 97.40/30 band at the time of writing.
US Dollar Index met resistance near 97.60
Following three consecutive daily advances, the index met some selling pressure at the end of the week amidst the generalized cautiousness prevailing in the global markets.
In fact, renewed concerns over recent pick-ups in coronavirus cases – mainly in China and Germany – coupled with the relentless increase in cases in the US have undermined the sentiment surrounding the risk complex, thus lending the buck extra legs and helping it to extend the bounce off last week’s lows in the 95.70 region.
In addition, and in spite of the recent rebound in some key US fundamental indicators, the labour market remains well under pressure (as per weekly Initial Claims) and keep the sentiment subdued among market participants.
Later in the NA session, Current Account figures will be the only release, while Fed’s Powell will participate in a virtual discussion on ‘Building a Resilient Workforce During the COVID-19 Era’ at the Cleveland Fed. In addition, Boston Fed E.Rosengren (2022 voter, hawkish), FOMC’s R.Quarles (permanent voter, centrist) and Cleveland Fed L.Mester (voter, hawkish) are all due to speak later in the session.
What to look for around USD
The index has met important resistance in the 97.60 region so far this week, bolstered by renewed safe haven demand in response to the re-emergence of coronavirus jitters. Other than that, and as usual in past weeks, price action around DXY is expected to track the performance of the broad risk appetite trends, US-China trade developments and the developments from the re-opening of the economy. On the constructive stance around the buck, bouts of risk aversion should support the investors’ preference for the greenback as a safe haven along with its status of global reserve currency and store of value.
US Dollar Index relevant levels
At the moment, the index is losing 0.02% at 97.43 and faces initial contention at 95.72 (monthly low Jun.10) followed by 95.03 (2019 low Jan.10) and then 94.65 (2020 low Mar.9). On the flip side, a break above 97.58 (weekly high Jun.18) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.39 (200-day SMA).
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