- Dollar index eyes weekly gain on worsening of risk sentiment.
- Renewed coronavirus concerns and the US fiscal impasse pushes stocks lower.
The dollar index (DXY), which tracks the greenback’s value against majors, is currently hovering at 93.80, representing a nearly 0.8% gain for the week. The index has posted losses in the previous two weeks.
Risk-off
The fragile risk sentiment in the global markets has supported the greenback this week. Notably, the US stocks dropped for the third straight day on Thursday as an unexpected rise in the weekly jobless claims revived fears of a slowdown in the world’s largest economy.
Additionally, deadlock in Washington over the fiscal stimulus talks and the coronavirus resurgence across Europe weighed over the investor sentiment and put a bid under the greenback.
However, while heading into the weekend, the dollar may face some selling pressure if global stocks witness risk reset, as suggested by the 0.2% gain in the S&P 500 futures. That said, significant gains look unlikely due to renewed virus fears and growth concerns. As such, the dollar is likely to close the week with gains, snapping a two-week losing trend.
Technical levels
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