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  • DXY bounces off daily lows near 96.80 on Thursday.
  • The US economy added 4.8 million jobs in June.
  • The jobless rate receded to 11.1% from May’s 13.5%.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, has managed to rebound from daily lows near 96.80 and regain the 97.00 yardstick and above at the time of writing.

US Dollar Index bounces off lows on strong data

The index reclaimed the 97.00 neighbourhood on Thursday following stronger-than-expected labour market report for the month of June.

In fact, latest Payrolls figures showed the economy added 4.8 million jobs during last month and the unemployment rate ticked lower to 11.1% (from 14.7% recorded in April). Additional data due today noted Initial Claims rose more than 1.4 million from a week earlier and the trade deficit widened to $54.60 billion during May.

In the meantime, the risk-on trade remains the “name of the game” in town, with US stock indices navigating a sea of green and the NASDAQ printing fresh all-time highs. Curiously, the upbeat mood prevails among investors despite the coronavirus pandemic remains out of control, let alone unabated, in the US.

What to look for around USD

The unremitting advance of the pandemic in the US remains in centre stage amidst efforts to keep the re-opening of the economy well in place and news surrounding potential vaccines. 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 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 0.12% at 97.03 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 98.33 (200-day SMA).