US Dollar Index regains poise above 100.00 ahead of FOMC

• DXY retakes the 100.00 mark and above on Wednesday.
• COVID-19 pandemic remains in centre stage worldwide.
• FOMC minutes will be in the limelight later on Wednesday.

After bottoming out in the 99.80/75 band on Tuesday, the greenback has now regained some composure and returned to the area above the 100.00 mark when gauged by the US Dollar Index (DXY).

US Dollar Index focused on coronavirus

Following four consecutive daily advances, the index gave away part of those gains on Tuesday, as renewed hopes that the COVID-19 pandemic could be losing some traction lent extra oxygen to the global sentiment.

However, the dollar regained composure on Wednesday amidst the resumption of the selling pressure in some of the dollar’s rivals like the euro, the British pound and the Japanese yen.

Later in the NA session, the only release of note will be the FOMC minutes of the March 15 (in between) meeting, where the Fed reduced the Fed Funds Target Rate (FFTR) to 0.0%-0.25% and announced a $700 billion QE. In addition, the EIA will publish its weekly report on US crude oil supplies.

What to look for around USD

DXY reclaimed the bid bias above the 100.00 mark on Wednesday following the corrective downside seen in the previous session. In the meantime, attention remains on the progress of the COVID-19 in the US and the impact on the economy, which is seen slipping back into recession later this year. On the supportive side for the buck, market participants seem to prefer the dollar vs. other safe havens like the Japanese yen and the Swiss franc in cases when risk aversion kicks in, all helped by its status of “global reserve currency” and store of value.

US Dollar Index relevant levels

At the moment, the index is advancing 0.22% at 100.18 and a break above 100.93 (weekly/monthly high Apr.6) would open the door to 101.34 (monthly high Apr.10 2017) and finally 102.99 (2020 high Mar.20). On the other hand, the next support emerges at 99.77 (weekly high Apr.7) followed by 98.27 (weekly low Mar.27) and then 98.12 (200-day SMA).