US Dollar Index trims gains and recedes to 99.70/65

• DXY fades the initial spike to the 100.00 mark.
• US Initial Claims surged by nearly 5.3M during last week.
• Philly Fed index plummeted to -56.6 in April.

After an ephemeral test of the triple-digit resistance earlier in the session, the greenback has now receded to the 99.70/65 band when measured by the US Dollar Index (DXY).

US Dollar Index offered post-data

The index met strong resistance in the 100.00 neighbourhood so far this week and eroded part of those gains although it so far manages well to cling to the positive territory in the 99.70 area at the time of writing.

The persistent risk-off sentiment has been sustaining the recent sharp rebound in the sentiment around the buck, sponsoring the bounce off lows in the sub-99.00 region earlier in the week.

In the docket, another important surge in weekly claims, this time by more than 5.2M, hints at the likeliness that the jobless rate is already hovering around the 15% (from the multi-decade 3.5% recorded in March).

Further data saw the Philly Fed Manufacturing index collapsing to -56.6 for the current month, while Housing Starts and Building Permits increased by 1.216M units and 1.353M units, respectively, during March.

What to look for around USD

DXY has managed to regain composure on the back of the resumption of the “fly-to-safety” environment. In the meantime, all the attention remains on the COVID-19 amidst countries extending their lockdown periods, speculation of a global recession and further deterioration of fundamentals. On the supportive side for the buck, market participants seem to prefer the dollar vs. other safe havens like the Japanese yen and the Swiss franc in cases when risk aversion kicks in, all helped by its status of “global reserve currency” and store of value.

US Dollar Index relevant levels

At the moment, the index is gaining 0.16% at 99.73 and a break above 100.00 (weekly high Apr.16) would aim for 100.49 (78.6% Fibo retracement of the 2017-2018 drop) and then 100.93 (weekly/monthly high Apr.6). On the other hand, the next support lines up at 98.82 (monthly low Apr.15) followed by 98.27 (weekly low Mar.27) and finally 98.18 (200-day SMA).