US Dollar Index clings to gains near 93.70 ahead of data


  • DXY sticks to the daily recovery although below the 94.00 mark.
  • Markets’ sentiment keeps favouring the safe haven demand on Tuesday.
  • S&P/Case-Shiller Index came in below estimates at 3.7% in May.

The greenback, in terms of the US Dollar Index (DXY), remains on the positive note around the 93.70 region on Tuesday.

US Dollar Index looks to data, FOMC, earnings

The index is so far reversing a 6-session negative streak, including fresh 2-year lows in the 93.50 region on Tuesday.

The greenback appears benefited on Tuesday following the profit taking mood in the risk complex, all in response to the strong gains recorded in past weeks.

The dollar’s recovery, however, is expected to be short-live and somewhat limited, as the broader risk appetite trends continue to favour inflows into the riskier assets, always against the backdrop of the reflation trade, optimism ahead of corporate earnings and hopes of a coronavirus vaccine.

In the US data space, house prices tracked by the S&P/Case-Shiller Index expanded 3.7% in May from a year earlier, missing previous estimates. Later in the NA session, the focus of attention will be on July’s Consumer Confidence gauge by the Conference Board.

What to look for around USD

The relentless advance of the coronavirus pandemic in the US and across the world vs. the probability that a COVID-19 vaccine could be out in the medium-term plus the ongoing reopening of global economies are all driving the sentiment in the global markets while keeping the demand for the safe haven dollar well depressed. While bouts of risk aversion are seen supportive of the greenback, these seem quite unlikely, at least in the near-term, in the current context and therefore any rebound in DXY should be deemed as short-lived. On another front, the speculative community kept adding to the offered note around the dollar for yet another week, opening the door to a potential development of a more serious bearish trend in the dollar.

US Dollar Index relevant levels

At the moment, the index is gaining 0.02% at 93.67 and a break above 94.20 (38.2% Fibo of the 2017-2018 drop) would open the door to 96.03 (50% Fibo of the 2017-2018 drop) and finally 97.23 (55-day SMA). On the flip side, the next support is located at 93.48 (2020 low Jul.27) seconded by 93.19 (monthly low June 2018) and then 91.80 (monthly low May 18).

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