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  • DXY looks to stabilize around 97.00 following Monday’s sell-off.
  • Markets’ focus remains on the relentless advance of the coronavirus pandemic.
  • Markit’s Manufacturing PMI, New Home Sales next on tap in the US docket.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main rivals, is alternating gains with losses in the 97.00 neighbourhood.

US Dollar Index focused on data, COVID-19

After a brief move to the 96.90 region during early trade, or multi-day lows, the index has managed to regain some composure and retake the 97.00 mark following the opening bell in the Old Continent.

In the meantime, market participants continue to gauge the re-opening of the economy despite the persistent advance of coronavirus contagion in the US and fresh outbreaks in several countries. It is worth recalling that Monday’s strong gains in the US stock markets came on the back of auspicious news citing that biotech Gilead Sciences will start human trials of an anti-coronavirus treatment.

Later in the session, Markit will publish its preliminary manufacturing gauge seconded by May’s New Home Sales.

What to look for around USD

Another pick-up in the risk complex hurt the greenback and forced the index to abandon the area of recent tops at the beginning of the week, ignoring at the same time the unremitting advance of the COVID-19 pandemic. In the meantime, price action around the dollar is expected to track the performance of the broad risk appetite trends, US-China trade developments and the developments from the re-opening of the economy. 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 0.01% at 97.00 and faces initial contention at 96.89 (weekly low Jun.23) seconded by 96.03 950% Fibo of the 2017-2018 drop) and finally 95.72 (monthly low Jun.10). On the flip side, a break above 97.74 (weekly high Jun.22) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.38 (200-day SMA).