- DXY manages to hold on above the 99.00 mark on Wednesday.
- Global markets look side-lined for the time being.
- Bullard, Fed’s Beige Book noteworthy in the docket later in the session.
The US Dollar Index (DXY), which gauges the buck vs. a bundle of its main competitors, has managed to bounce off recent lows in sub-99.00 levels and retake the 99.15/20 band at the time of writing.
US Dollar Index focused on risk trends, coronavirus
The index is posting decent gains on Wednesday, reversing at the same time three consecutive daily pullbacks including a failed test of the critical triple-digit barrier on Monday.
The buck has regained some poise on Wednesday after the sharp drop during the previous session. In fact, the dollar eased ground on Tuesday on the back of the renewed demand for the riskier assets, all in response to news regarding a potential COVID-19 vaccine, this time by US biotech Novavax.
In addition, hopes of a quicker return to normality remain on the rise following the gradual re-opening of the US and overseas economies.
Later in the session, St.Louis Fed J.Bullard (2022 voter, dovish) is due to speak seconded by the release of the Fed’s Beige Book.
On Tuesday, the Consumer Confidence tracked by the Conference Board dropped to 86.6 for the month of May, also collaborating with the sour mood around the buck.
What to look for around USD
The greenback lost momentum just below 100.00 the figure so far this week on the back of a better mood in the riskier assets. In the meantime, the dollar remains vigilant on the US-China trade front, the gradual return to some sort of normality in the US economy and developments from the coronavirus pandemic. On the constructive stance around the buck, it remains the safe haven of choice among investors, helped by its status of global reserve currency and store of value. The dollar also derived extra support after Fed’s J.Powell recently ruled out negative rates, although he stressed the readiness of the Fed to implement further measures to support the economy.
US Dollar Index relevant levels
At the moment, the index is gaining 0.16% at 99.17 and a break above 99.98 (weekly high May 25) would aim for 100.56 (monthly high May 14) and finally 100.93 (weekly/monthly high Apr.6). On the other hand, immediate contention emerges at 98.90 (weekly low May 26) followed by 98.57 (monthly low May 4) and then 98.49 (200-day SMA).
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