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  • DXY comes under extra selling pressure and drops to 98.75/70.
  • Flash Q1 GDP seen contracting 5.0%, a tad below consensus.
  • Initial Claims rose at a weekly 2.123 million, missing estimates.

The greenback, in terms of the US Dollar Index (DXY), is now losing further momentum and drops to daily lows in the 98.70/75 band.

US Dollar Index weaker post-data

The index gathered extra downside pressure after the second revision of US GDP showed the economy is now expected to contract at an annualized 5.0% in the January- March period.

Results from the labour market also came in short of expectations after Initial Claims increased by around 2.1 million Americans during last week. Continuing Claims, however, shrunk to a little more above 21 million, also bettering predictions.

Additional US data noted Durable Goods Orders contracted 17.2% during April and Core orders dropped 7.4%, both prints surpassing previous forecasts.

Next on tap will be April’s Pending Home Sales and the weekly report on US crude oil inventories by the EIA.

What to look for around USD

The greenback lost momentum just below 100.00 the figure so far this week on the back of a better mood in the riskier assets. In the meantime, the dollar remains vigilant on the US-China trade front, the gradual return to some sort of normality in the US economy and developments from the coronavirus pandemic. On the constructive stance around the buck, it remains the safe haven of choice among investors, helped by its status of global reserve currency and store of value. The dollar also derived extra support after Fed’s J.Powell recently ruled out negative rates, although he stressed the readiness of the Fed to implement further measures to support the economy.

US Dollar Index relevant levels

At the moment, the index is retreating 0.20% at 98.76 and faces the next support at 98.72 (weekly low May 27) followed by 98.57 (monthly low May 4) and then 98.49 (200-day SMA). On the upside, a break above 99.98 (weekly high May 25) would aim for 100.56 (monthly high May 14) and finally 100.93 (weekly/monthly high Apr.6).