Search ForexCrunch
  • DXY has started the month on a positive note.
  • Chinese coronavirus remains in centre stage.
  • US ISM Manufacturing, Payrolls, Fedspeak all due this week.

The greenback, in terms of the US Dollar Index (DXY), has started the week on a firm note and is recovering some ground to the 98.50 region following Friday’s sharp pullback.

US Dollar Index looks to coronavirus, data

Following two consecutive daily declines – including the breakdown of the key 200-day SMA around 97.70 – the index has managed to attract some buying attention at the beginning of the week and bounce off recent lows in the 97.30 region.

In the meantime, developments from the Chinese coronavirus and its impact on global growth, particularly in China, continue to drive the sentiment in the global markets and keep the bid tone intact around the safe havens. Against this backdrop, yields of the US 10-year note dropped to levels last seen in September 2019 around 1.50%.

Later in the session, the always-relevant ISM Manufacturing will be the salient event on Monday. Further key data releases to be published this week include the ISM Non-Manufacturing, the ADP report and January’s Payrolls, all along Fed-speakers scheduled throughout the week.

What to look for around USD

The index sold off to the proximity of 97.30 at the end of last week, returning to the area below the critical 200-day SMA. Following the neutral/dovish message from the FOMC, investors are now focused on key indicators out later this week as well as any progress of the Wuhan coronavirus. The recent breakdown of the 200-day SMA has neutralized the constructive view on the dollar, although it is expected to remain underpinned by the current ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, auspicious results from the US fundamentals, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the index is advancing 0.12% at 97.48 and a break above 97.71 (200-day SMA) would open the door to 97.87 (61.8% Fibo of the 2017-2018 drop) and then 98.19 (2020 high Jan.29). On the other hand, immediate contention emerges at 97.35 (weekly low Jan.31) seconded by 97.09 (weekly low Jan.16) and then 96.36 (monthly low Dec.31 2019).