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  • DXY edges higher and reclaims the 99.60 region on Friday.
  • Global sentiment appears biased towards the risk-off trade.
  • US-China trade jitters returned to the fore and support the dollar.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its peers, is adding to Thursday’s gains around the 99.60 area.

US Dollar Index looks supported on risk-off trade

The index is extending the optimism in the second half of the week bolstered by the re-emergence of US-China trade concerns, while investors continue to express their preference for the dollar among other safe havens.

The greenback managed to leave behind another ugly release of weekly Claims after more than 2.4 million Americans filed for unemployment insurance benefits during last week. In the meantime, the Philly Fed manufacturing gauge appears to have bottomed out in April (as per May’s rebound), while Existing Home Sales and Markit’s flash PMIs surpassed expectations.

There are no scheduled releases in the US calendar on Friday, while attention remains on the gradual re-opening of the US economy. Investors, in the meantime, are expected to closely follow the publication of the ECB minutes due later in the European afternoon.

What to look for around USD

The greenback has regained some poise in the second half of the week on the back of the resumption of the risk aversion in the global markets. In the meantime, the dollar remains vigilant on the US-China trade front and the gradual return to some sort of normality in the US economy. 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 level

At the moment, the index is gaining 0.20% at 99.63 and a break above 100.56 (monthly high May 14) would open the door to 100.93 (weekly/monthly high Apr.6) and finally 101.34 (monthly high Apr.10 2017). On the other hand, the next support emerges at 99.00 (weekly low May 20) followed by 98.94 (100-day SMA) and then 98.47 (200-day SMA).