US Dollar Index flirts with 99.00 ahead of data

• DXY is up smalls near the 99.00 mark on Wednesday.
• President Trump said some US states could lift restrictions soon.
• Retail Sales, Industrial Production next of relevance in the docket.

The greenback, in terms of the US Dollar Index (DXY), is posting marginal gains around the 99.00 neighbourhood on Wednesday.

US Dollar Index tests the 55-day SMA

The index is recovering some ground lost in the middle of the week following Tuesday’s sharp sell-off to sub-99.00 levels, area coincident with the 55-day SMA. In this regard, further downside could see the critical 200-day SMA re-visited.

In the meantime, price action continues to gyrate around the impact of the COVID-19 on the global economy, with market consensus keeps pointing to a sharp contraction of the activity in the first half of the year followed by a robust recovery in Q3 and Q4.

Moving forward, the release of Retail Sales for the month of March dominates the US calendar seconded by Industrial Production, Capacity Utilization, the NAHB Index, TIC Flows, Business Inventories, the Fed’s Beige Book and the EIA’s weekly report on US crude oil supplies.

In addition, Atlanta Fed R.Bostic (2021 voter, centrist) is due to speak.

What to look for around USD

DXY has started the second consecutive week on a bearish fashion following the recently announced Fed measures and further deterioration of the US labour market. 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 0.08% at 98.94 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).