US Dollar Index weaker, challenges the 96.00 area
- DXY starts the week on the defensive near the 96.00 level.
- US housing data, Initial Claims, flash PMIs of relevance later in the week.
- Markets’ focus remains on the advance of the COVID-19 pandemic.
The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main rivals, is trading without clear direction around the 96.00 level in the beginning of the week.
US Dollar Index looks to coronavirus, risk trends
The index is prolonging its relentless decline for yet another session on Monday, challenging once again the key support around the 96.00 neighbourhood, where coincide a Fibo level (of the 2017-2018 drop).
In the meantime, the macro picture remains well unchanged, with headlines from the coronavirus pandemic dominating the scenario and carrying the potential to undermine the ongoing gradual recovery of the US economy.
In the US data space, a light calendar lies ahead in the week, where the main releases will be in the housing sector, the usual weekly report on the labour market and preliminary prints from Markit’s Manufacturing/Services PMIs.
What to look for around USD
The relentless advance of the COVID-19 pandemic in the US and across the world vs. news of a potential vaccine that could be developed before markets’ expectations plus the ongoing reopening of global economies are all driving the sentiment in the global markets and keep the dollar under pressure. On the constructive view of the dollar, 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 retreating 0.16% at 95.86 and faces the next support at 95.78 (low Jul.15) seconded by 95.72 (monthly low Jun.10) and then 94.65 (2020 low Mar.9). 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 98.19 (200-day SMA).