US Dollar Index clings to gains above 99.00 ahead of ISM
- DXY looks to reverse Tuesday’s losses, sticks to 99.00.
- Fed announced a temporary repurchase agreement facility.
- US March ISM Manufacturing next of relevance in the docket.
The greenback, when tracked by the US Dollar Index (DXY), is posting decent gains above the 99.00 mark ahead of the opening bell in Euroland on Wednesday.
US Dollar Index focused on COVID-19 headlines, data
The index is so far reversing Tuesday’s pullback and manages well to keep business above the key barrier at 99.00 the figure.
In fact, quarter/month-end flows kept the buck under pressure in the first half of the week, forcing DXY to fade the initial advance to the vicinity of the key 100.00 mark, or 3-day highs.
Further out, and in order to alleviate the recent stress surrounding dollar funding and adding to the measures to fight the impact of the COVID-19 on the economy, the Federal Reserve announced on Tuesday a temporary repurchase agreement facility aimed to foreign central banks, which can now use their Treasuries holdings to liquidate positions.
Later in the NA session, the always-significant ISM Manufacturing for the month of March will be in centre stage seconded by the final manufacturing gauge measured by Markit for the same period and the EIA’s weekly report on crude oil supplies.
On Tuesday, the Consumer Confidence tracked by the Conference Board surprised to the upside at 120.0 for the month of March, down from February’s 132.6 (revised from 130.7).
What to look for around USD
DXY has regained the upper hand so far this week after bottoming out in the 98.30 region in past sessions. In addition, the greenback has so far managed to keep business above the key 200-day SMA and therefore maintaining the constructive outlook while re-targeting the triple-digit barrier. However, speculation of extra stimulus carries the potential to undermine the recovery in the buck and thus leaving the upside somewhat limited, all against the backdrop of unremitting concerns around the fallout of the coronavirus.
US Dollar Index relevant levels
At the moment, the index is gaining 0.16% at 99.10 and a breakout of 99.95 (weekly high Mar.31) would aim for 100.49 (78.6% Fibo retracement of the 2017-2018 drop) and then 102.99 (2020 high Mar.20). On the other hand, the next support emerges at 98.27 (weekly low Mar.27) seconded by 98.03 (200-day SMA) and then 97.87 (61.8% Fibo retracement of the 2017-2018 drop).
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
