US Dollar Index comes under pressure and recedes to 100.00

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, has come under strong selling pressure and trades in fresh lows in sub-100.00 levels.

US Dollar Index offered on risk-on mood

The index breaches the key support at 100.00 the figure at the beginning of the week, slipping back to new 3-day lows on the back of the strong improvement in the risk-associated universe.

In fact, riskier assets have left behind the initial pessimism after biotech company Moderna Inc. said initial vaccine results were positive following tests to 45 participants, all of them showing the production of antibodies to the coronavirus.

Adding to the better tone in the risk complex, Chinese demand for crude oil continues to give signs of recovering, motivating prices of the commodity to extend the rally to the vicinity of $35.00 mark and $32.00 mark per barrel of the Brent crude and the West Texas Intermediate, respectively.

Later in the week, all the attention will be on the testimony by Chief Jerome Powell along with Fedspeak, FOMC minutes, Initial Claims and the Philly Fed manufacturing index.

What to look for around USD

The greenback has started the week on a cautious note, always vigilant on the US-China trade front and the gradual return to some normality in the US economy. Supporting the momentum around the greenback emerges the current “flight-to-safety” environment, helped by its status of global reserve currency and store of value. The dollar has also derived extra support after Fed’s J.Powell ruled out negative rates at his recent testimony.

US Dollar Index relevant levels

At the moment, the index is losing 0.33% at 100.03 and faces the next support at 99.49 (55-day SMA) followed by 99.12 (weekly low May 11) and then 98.57 (monthly low May 4). On the flip side, a breakout of 100.93 (weekly/monthly high Apr.6) would open the door to 101.34 (monthly high Apr.10 2017) and finally 102.25 (monthly high Mar.9 2017).