- DXY slips back to the 100.30 region on Thursday.
- Extra stimulus, oil rebound, positive corporate earnings help sentiment.
- Markets’ attention is fixed on weekly Initial Claims later on Thursday.
The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main competitors, is struggling for direction in the 100.30 region in the second half of the week.
US Dollar Index remains capped by 100.50
The index is showing some signs of exhaustion after failing once again to surpass the so far tough hurdle at the 100.50 region, where also sits a Fibo retracement of the 2017-2018 descent.
The sentiment around the dollar ebbed somewhat in past hours in response to an improved mood in the risk-complex, in turn sustained by positive results from corporate earnings, the rebound in crude oil prices and the recovery in US yields.
Later in the NA session, weekly Claims will remain in centre stage with consensus expecting around 4M citizen to have filed for unemployment benefits during last week. In addition, Markit will publish its flash gauge for the services and manufacturing sectors for the current month and we will also see the results from New Home Sales in March.
What to look for around USD
The recovery in DXY met some resistance near 100.50 for the time being. The recent improved sentiment in the dollar has been propped up by the “fly-to-safety” environment, as investors continue to prefer the dollar to the rest of the safe haven universe. In the meantime, all the attention remains on the COVID-19 amidst countries extending their lockdown periods, speculation of a global recession and further deterioration of fundamentals. On the supportive side of the buck, its status of “global reserve currency” and store of value underpins its preference in the safe haven universe.
US Dollar Index relevant levels
At the moment, the index is losing 0.07% at 100.28 and a break above 100.48 (weekly high Apr.21) would aim for 100.49 (78.6% Fibo retracement of the 2017-2018 drop) and then 100.93 (weekly/monthly high Apr.6). On the flip side, the next support emerges at 99.21 (55-day SMA) seconded by 98.82 (monthly low Apr.15) and finally 98.27 (weekly low Mar.27).
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