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  • DXY pushes higher to the boundaries of 100.00.
  • US advanced headline Retail Sales dropped 8.7% MoM.
  • The Fed will publish its Beige Book later in the session.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, is trading on a solid foot near the key barrier at 100.00 the figure.

US Dollar Index bid on risk-off sentiment

The index advances to fresh 4-day highs in the area just shy of the 100.00 mark in the middle of the week in a context dominated by the risk-off sentiment and where COVID-19 concerns remain in centre stage.

The dollar picked up extra pace on Wednesday against the backdrop of increasing selling bias in its peers, namely the euro, the sterling and the yen, showing once again investors’ preference for the buck when comes to safe haven demand.

In the US data space, advanced headline Retail Sales contracted at a monthly 8.7% and Core Sales dropped 4.5% during March. Additional releases saw the Industrial Production contracting 5.4% inter-month, while Manufacturing Production shed 6.3% from a month earlier. Capacity Utilization followed suit and eased to 72.7% and the NY Empire State Index plummeted to -78.20 for the current month (from -21.50).

What to look for around USD

DXY has managed to regain composure on the back of the “fly-to-safety” environment amidst the renewed sentiment towards the risk aversion. 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 for the buck, market participants seem to prefer the dollar vs. other safe havens like the Japanese yen and the Swiss franc in cases when risk aversion kicks in, all helped by its status of “global reserve currency” and store of value.

US Dollar Index relevant levels

At the moment, the index is gaining 1.03% at 99.87 and a break above 100.49 (78.6% Fibo retracement of the 2017-2018 drop) would open the door to 100.93 (weekly/monthly high Apr.6) and then 101.34 (monthly high Apr.10 2017). On the other hand, the next support lines up at 98.82 (monthly low Apr.15) followed by 98.27 (weekly low Mar.27) and finally 98.18 (200-day SMA).