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  • DXY fades the recent strength and returns to 97.20.
  • FOMC, Powell, NFP take centre stage later this week.
  • Pending Home Sales, Fedspeak next on the calendar on Monday.

The greenback, in terms of the US Dollar Index (DXY), has started the week on a negative footing and recedes to the 98.30/20 band at the time of writing.

US Dollar Index looks to data, risk trends

After three consecutive daily advances, the index is now trading on the defensive against the backdrop of a better mood in the broad risk appetite trends.

In the meantime, investors’ attention continues to look to the developments of the coronavirus pandemic and its potential impact on the economic recovery, all amidst the persistent raise in infected cases and fresh outbreaks around the world.

Later in the session May’s Pending Home Sales are due seconded by the Dallas Fed index. In addition, San Francisco Fed M.Daly (2021 voter, centrist) and New York Fed J.Williams (permanent voter, centrist) are due to speak.

What to look for around USD

The re-emergence of the risk aversion in response to COVID-19 developments and trade jitters have lent extra support to the dollar in past sessions. In the meantime, price action around the buck is expected to track the performance of the broad risk appetite trends, US-China trade developments and the progress of 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. Playing against this, the ongoing (and potentially extra) stimulus packages by the Federal Reserve could limit the dollar’s upside.

US Dollar Index relevant levels

At the moment, the index is losing 0.27% at 97.23 and faces the next support at 96.39 (weekly low Jun.23) seconded by 96.03 (50% Fibo of the 2017-2018 drop) and finally 95.72 (monthly low Jun.10). On the upside, a break above 97.74 (weekly high Jun.22) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.36 (200-day SMA).