- DXY navigates within a tight range in the 99.50 region.
- Powell reiterated the Fed stays reay to keep supporting the economy.
- The release of the FOMC minutes will be the salient event later on Wednesday.
The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main competitors, remains within a rangebound scenario in the mid-99.00s for the time being.
US Dollar Index looks to risk trends, FOMC
The index is receding for the third session in a row on Wednesday, as global sentiment remains biased towards the riskier assets despite the optimism following biotech Moderna’s results of a potential vaccine appear somewhat mitigated.
The dollar stayed apathetic on Tuesday after Chief Powell reiterated once again the readiness of the Federal Reserve to keep supporting the economy by using its ‘full range of tools’, while stressing at the same time that more needs to be done by the Fed and the Congress.
In the meantime, the asymmetrical and gradual re-opening of the US economy remains in centre stage so far, while the coronavirus outbreak is not giving sustainable signs of abating in the US with more than 92K deaths and nearly 1.6M infected cases.
Later in the US data space, MBA’s Mortgage Applications are due seconded by the weekly report by the EIA and the publication of the FOMC minutes.
What to look for around USD
The greenback has started the week on a negative fashion, falling below the 100.00 mark on Monday on the back of the resumption of the risk-on sentiment 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.
US Dollar Index relevant levels
At the moment, the index is losing 0.10% at 99.48 and faces the next support at 99.23 (weekly low May 19) followed by 99.12 (weekly low May 11) and then 98.46 (200-day SMA). On the upside, 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).
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