- DXY trades directionless in the 97.80 region on Tuesday.
- Investors’ attention shifted to the civil unrest in the US.
- The API’s weekly report on US crude oil supplies next on tap.
The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, is struggling for direction in the 97.80 region on turnaround Tuesday.
US Dollar Index weakens to 3-month lows
There are no signs of relief to the bearish note around the dollar so far this week, with the index losing ground for the sixth session in a row and trading in levels las seen in mid-March.
The greenback started to lose momentum late in May following the combination of month-end flows plus the moderate improvement in the risk-associated universe. Collaborating with this scenario, economies around the world continue their gradual re-opening and the slow return to some sort of normality as the coronavirus pandemic keeps ebbing and this is somewhat offsetting the persistent US-China trade concerns.
Further out, market participants continue to closely follow the events in the US against the backdrop of rising civil unrest and the potential answer from the White House.
Later in the session, the only release of note will be the weekly report by the API on US crude oil inventories.
What to look for around USD
The greenback remains under heavy pressure at the beginning of the month, threatening to extend the downtrend well below the 98.00 mark against the backdrop of firm risk-on sentiment. 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 the broader risk appetite trends as main drivers of the price action. 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.
US Dollar Index relevant levels
At the moment, the index is gaining 0.09% at 97.90 and a break above 98.50 (200-day SMA) would aim for 99.04 (100-day SMA) and finally 99.98 (high May 25). On the other hand, the next support emerges at 97.74 (monthly low Jun.2) followed by 97.35 (low Jan.31) and then 97.11 (monthly low Nov.1 2019).
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