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  • DXY loses upside momentum and returns to 96.70.
  • The dollar gained ground on Thursday on increased risk aversion.
  • Export/Import Prices, flash U-Mich index next on the docket.

The greenback, in terms of the US Dollar Index (DXY), has now returned to the negative ground around the 96.70 region.

US Dollar Index capped near 97.00

After climbing to as high as the boundaries of the 97.00 barrier earlier in the session, the index is now correcting lower against the backdrop of some improvement in the risk appetite trends.

In fact, the dollar’s momentum appears to have run out of steam near 97.00 at the end of the week following Thursday’s strong advance on the back of renewed coronavirus concerns and the negative views on the economy observed by the Federal Reserve at its meeting on Wednesday.

Moving forward, US Export/Import Prices are coming up next in the calendar seconded by the preliminary gauge of the Consumer Sentiment for the month of June.

What to look for around USD

The index “woke up” amidst renewed concerns over a probable second wave of coronavirus contagion while the gloomy economic prospects by the Fed earlier in the week also collaborated with the pick-up in the buying interest in the buck. Other than that, and as usual in past weeks, price action around DXY is expected to track the performance of the broad risk appetite trends, US-China trade developments and the progress (or lack of it) 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 losing 0.09% at 96.73 and faces immediate contention at 95.72 (monthly low Jun.10) followed by 95.03 (2019 low Jan.10) and then 94.65 (2020 low Mar.9). On the upside, a break above 97.07 (weekly high Jun.8) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.42 (200-day SMA).

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