- DXY keeps the buying interest in place on Thursday near 96.30.
- US Initial Claims rose by 1.54 million during last week.
- US markets trade deeply into the negative territory on COVID-19 fears.
The greenback, when tracked by the US Dollar Index (DXY), keeps the firm note so far around the 96.30/40 region on Thursday.
US Dollar Index bid on risk-off mood
The index is reversing the recent decline to fresh 3-month lows in sub-96.00s levels on the back of the resumption of the risk aversion in the US markets.
In fact, the US benchmark indices for stock markets are trading with strong losses on Thursday as investors continue to gauge the recent pick-up in coronavirus cases vs. the re-opening of the economy.
Adding to the sour mood, the FOMC left unchanged its monetary stance at Wednesday’s meeting, as expected, although it said the economy could take longer to recovery from the coronavirus fallout. Fed’s Powell reiterated that interest rates are seen at current levels for longer.
In the docket, weekly Initial Claims rose by 1.54 million, surpassing expectations and Producer Prices rose at a monthly 0.4% during May, also coming in above estimates.
What to look for around USD
The dollar met support below the 96.00 mark so far this week, recording at the same time fresh multi-month lows. As usual in past weeks, price action around the dollar is expected to keep tracking the performance of the broad risk appetite trends, US-China trade developments and the progress on the re-opening of the economy. 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 0.28% at 96.32 and a breakout of 97.87 (61.8% Fibo of the 2017-2018 drop) would aim for 98.43 (200-day SMA) and finally 98.98 (100-day SMA). On the downside, immediate contention emerges at 95.72 (monthly low Jun.10) followed by 95.03 (2019 low Jan.10) and then 94.65 (2020 low Mar.9).
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