US Dollar Index offered, challenges 97.00 ahead of ISM

• DXY comes under pressure and tests the 97.00 mark.
• US-China jitters return to the markets as sentiment driver.
• ISM Non-Manufacturing, Markit’s Services PMI next on tap.

The greenback, when tracked by the US Dollar Index (DXY), is adding to last week’s losses and puts the 97.00 mark under pressure on Monday.

US Dollar Index looks to data, US-China

The index has started the week on the defensive and trades close to the 97.00 neighbourhood against the backdrop of a better tone in the risk-associated universe.

Market participants seem to have left behind the unremitting advance of the coronavirus pandemic in the US and fresh outbreaks in Europe as well as renewed US-China concerns and chose to see the glass “half full” in light of the ongoing re-opening of the economy and positive results in fundamentals on both sides of the ocean.

In the US docket, the ISM Non-Manufacturing will be in centre stage later today as US markets return to activity following Friday’s Independence Day holiday. Further data releases include the final Markit’s Services/Composite PMI for the month of June.

What to look for around USD

The progress of the COVID-19 in the US remains in the centre of the debate amidst efforts to keep the re-opening of the economy well in place. As always, the broad risk appetite trends emerge as the main driver for the dollar in the short-term coupled with omnipresent US-China trade and geopolitical effervescence. 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. Playing against this, the ongoing (and potentially extra) stimulus packages by the Federal Reserve could limit the dollar’s upside.

US Dollar Index relevant levels

At the moment, the index is losing 0.23% at 96.93 and faces the next contention at 96.39 (weekly low Jun.23) seconded by 96.03 (50% Fibo of the 2017-2018 drop) and finally 95.72 (monthly low Jun.10). On the other hand, a break above 97.80 (weekly high Jun.30) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.31 (200-day SMA).