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US Dollar Index stays depressed near 97.60

  • DXY remains unable to gather serious traction.
  • US civil unrest stays in the limelight so far on Tuesday.
  • API’s weekly report on US crude oil supplies coming up next.

The greenback, in terms of the US Dollar Index (DXY), keeps trading on the defensive although it has so far managed to put some distance from earlier multi-week lows in the 97.45/40 band.

US Dollar Index weaker on risk-on mood

The index has accelerated the leg lower on Tuesday, briefly testing the vicinity of 97.40 – or 3-month lows – and always against the backdrop of the unremitting preference for riskier assets.

Also weighing on the sentiment surrounding the buck, investors keep scrutinizing the developments in many US cities in light of the recent violent protests and particularly following President Trump’s threat to send in the military.

Nothing scheduled in the calendar other than the usual weekly report by the American Petroleum Institute (API) on US crude oil inventories due later in the NA session. Moving forward, results from the US labour market are expected to grab all the attention following the ADP report (Wednesday), Initial Claims (Thursday) and Non-farm Payrolls (Friday).

What to look for around USD

The greenback remains under heavy pressure at the beginning of the month, threatening to extend the downtrend well below the 98.00 mark against the backdrop of firm risk-on sentiment. In the meantime, the dollar remains vigilant on the US-China trade front, the gradual return to some sort of normality in the US economy and the broader risk appetite trends as main drivers of the price action. 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 0.21% at 97.61 and faces initial support at 97.43 (monthly low Jun.2) followed by 97.35 (low Jan.31) and then 97.11 (monthly low Nov.1 2019). On the upside, a break above 98.50 (200-day SMA) would aim for 99.04 (100-day SMA) and finally 99.98 (high May 25).

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