- DXY stays (very) bearish in the sub-95.00 area on Thursday.
- DXY now targets the 2020 lows in the 94.65/60 band (March 9).
- Initial Claims only of relevance in the US docket later in the session.
The greenback, in terms of the US Dollar Index (DXY), is extending the leg lower to the area below the key support at 95.00 the figure on Thursday.
US Dollar Index focused on data, risk trends
The index is down for the fifth consecutive session in the second half of the week, navigating at shouting distance from the YTD lows in the vicinity of 94.60 and entering the oversold territory for the first time since mid-June.
Indeed, the solid improvement in the risk complex in response to auspicious news regarding a potential COVID-19 vaccine and hopes of a strong economic recovery have been keeping the dollar under heavy pressure since late-June/early July. Additionally, the massive amount of monetary stimulus across the world have also prompted investors to look past the pandemic and focus on riskier assets.
In the US docket, the weekly report on Initial Claims will be the only release of note later in the NA session seconded by the Leading Index for the month of June measured by the Conference Board.
What to look for around USD
The relentless advance of the coronavirus pandemic in the US and across the world vs. the probability that a COVID-19 vaccine could be out in the medium-term plus the ongoing reopening of global economies are all driving the sentiment in the global markets and keep the dollar under downside pressure. On the constructive view of the dollar, 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. On another front, the speculative community kept adding to the offered note around the dollar for yet another week, opening the door to a potential development of a more serious bearish trend in the dollar.
US Dollar Index relevant levels
At the moment, the index is losing 0.13% at 94.85 and faces the next support at 94.78 (monthly low Jul.23) seconded by 94.65 (2020 low Mar.9) and then 94.20 (38.2% Fibo of the 2017-2018 drop). On the other hand, a break above 96.03 (50% Fibo of the 2017-2018 drop) would aim for 97.55 (55-day SMA) and finally 97.80 (weekly high Jun.30).
Share
