US Dollar Index climbs to fresh tops, approaches 101.00

• DXY keeps pushing higher and trades near 101.00.
• US Non-farm Payrolls came in at -70.1K in March.
• US unemployment rate leapt to 4.4% (from 3.5%).

The US Dollar Index (DXY), which tracks the buck vs. a bundle of its main competitors, remains on the positive path and is trading closer to the 101.00 mark, or weekly highs.

US Dollar Index stays bid despite poor Payrolls

The index managed to gain extra pace at the end of the week and advanced to new weekly highs around 100.80 despite the disappointing figures from the US labour market report.

In fact, the US labour market posted the first contraction since September 2010 after the Non-farm Payrolls showed the economy lost 701K jobs in March, more than the forecasted drop of 100K jobs. In addition, the unemployment rate ticked higher to 4.4% during the same period (from multi-decade low at 3.5%).

Additional results saw the Average Hourly Earnings surpassing estimates and expanding 0.4% inter-month and 3.1% from a year earlier.

These latest results, however, are seen as the tipping point of a much bigger drop expected for the month of April, as the survey is expected to include the second half of March, where the impact of the coronavirus on the labour market was much harder (as seen in the recent surge in weekly claims).

What to look for around USD

DXY has regained the upper hand so far this week after bottoming out in the 98.30 region in past sessions, managing to retake the key 100.00 barrier and above amidst firm safe haven demand. Indeed, market participants seem to prefer the dollar vs. other safe havens like the Japanese yen and the Swiss franc in a context of prevailing risk aversion, all in response to unabated concerns surrounding the coronavirus and its impact on the economy. Further support for the buck comes from its status of “global reserve currency” and store of value.

US Dollar Index relevant levels

At the moment, the index is gaining 0.66% at 100.76 and a breakout of 100.82 (weekly/monthly high Apr.3) would open the door to 102.99 (2020 high Mar.20) and finally 103.65 (monthly high December 2016). On the other hand, the next support emerges at 98.27 (weekly low Mar.27) seconded by 98.07 (200-day SMA) and then 97.87 (61.8% Fibo retracement of the 2017-2018 drop).