US Dollar Index struggles for direction around 99.50

• DXY keeps the upper end of the weekly range near 99.50.
• US-China trade war, coronavirus take centre stage once again.
• US ISM Non-Manufacturing, Trade Balance figures next of note.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, is looking for direction in the mid-99.00s following Monday’s sharp advance.

US Dollar Index focused on data

The index posted strong gains on Monday, mainly supported by the resurgence of the US-China trade war and the pick-up in the demand for the safe havens, which lend extra legs to the dollar.

However, the rebound in the buck met strong resistance in the mid-99.00s for the time being, although further upside should not be ruled out following Monday’s bullish ‘outside day’.

Later in the NA session, ISM Non-Manufacturing will take centre stage seconded by Trade Balance figures, Markit’s final Services PMI, the IBD/TIPP Index and speeches by Chicago Fed C.Evans (2021 voter, centrist), Atlanta Fed R.Bostic (2021 voter, centrist) and St.Louis Fed J.Bullard (2022 voter, dovish).

What to look for around USD

The weak note in the greenback seems to have met contention near 98.50 so far. In the meantime, investors have now shifted the attention back to the US-China trade war, while the country keeps planning the gradual re-opening of the economy. Supporting the momentum around the greenback emerges the current “flight-to-safety” environment, helped by its status of “global reserve currency” and store of value. On another front, and following the FOMC event, the Fed is expected to stay on the loose end of the monetary policy stance, at least until the coronavirus crisis abates.

US Dollar Index relevant levels

At the moment, the index is losing 0.10% at 99.41 and faces the next support at 98.57 (weekly low May 4) followed by 98.35 (200-day SMA) and then 97.87 (61.8% Fibo of the 2017-2018 drop). On the other hand, a break above 99.60 (weekly high May 4) would open the door to 100.49 (78.6% Fibo of the 2017-2018 drop) and finally 100.93 (weekly/monthly high Apr.6).