US Dollar Index bounces off lows near 95.80 ahead of data

  • DXY met decent support in the 95.80 region on Wednesday.
  • Risk-on sentiment keeps the dollar under pressure so far.
  • US Retail Sales and Initial Claims next of relevance in the docket.

After bottoming out in the vicinity of 95.80 on Wednesday, the greenback has managed to regain some composure and retake the 96.00 mark when tracked by the US Dollar Index (DXY).

US Dollar Index focused on data, risk trends

The index is navigating its fourth consecutive week in the negative territory so far, always under heavy downside pressure against the usual backdrop of the improved sentiment in the risk complex.

Indeed, the broad risk appetite trends continue to drive the mood in the global markets, in turn sustained by auspicious news regarding a coronavirus vaccine and the relentless re-opening of the economy.

It will be an interesting session in the US docket, as Retail Sales are due seconded by the Philly Fed Index, weekly Claims, Business Inventories, the NAHB index and TIC Flows. In addition, New York Fed and permanent voter J.Williams (centrist) and Chicago Fed C.Evans (2021 voter, centrist) are due to speak.

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 gaining 0.10% at 96.15 and a break above 97.80 (weekly high Jun.30) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.21 (200-day SMA). On the downside, the next support is located at 95.78 (low Jul.15) seconded by 95.72 (monthly low Jun.10) and then 94.65 (2020 low Mar.9).

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