- DXY comes under further pressure at the end of the week.
- The index breaks below the 200-day SMA in the 98.50 area.
- PCE results, flash Trade Balance figures next of relevance.
The greenback faces extra selling pressure at the end of the week and is forcing the US Dollar Index (DXY) to recede to fresh 2-month lows in the 98.20/15 band.
US Dollar Index weaker on risk appetite, flows
The index is down for the fourth consecutive session on Friday, extending further the weekly leg lower after Monday’s rejection of tops in the vicinity of the psychological 100.00 barrier.
Month-end flows and the improved sentiment in the risk-associated complex appear behind the move lower in the buck, all along the cautious stance from investors amidst the recent pick up in the US-China-Hong Kong effervescence.
Later in the NA session, all the attention is expected to be on President Trump’s press conference, with China on top of the agenda. Data wise, inflation figures tracked by the PCE area due, seconded by advanced Trade Balance results, the Chicago PMI, Personal Income/Spending and the final Consumer Sentiment gauge for the current month.
What to look for around USD
The greenback remains under heavy pressure towards the end of the month, putting the critical 200-day SMA to the test in the mid-98.00s. In the meantime, the dollar remains vigilant on the US-China trade front, the gradual return to some sort of normality in the US economy and the broader risk appetite trends as main drivers of the price action. On the constructive stance around the buck, it remains the safe haven of choice among investors, helped by its status of global reserve currency and store of value. The dollar also derived extra support after Fed’s J.Powell recently ruled out negative rates, although he stressed the readiness of the Fed to implement further measures to support the economy.
US Dollar Index relevant levels
At the moment, the index is retreating 0.21% at 98.26 and faces the next support at 98.18 (monthly low May 29) followed by 97.87 (61.8% Fibo of the 2017-2018 drop) and then 97.35 (low Jan.31). On the upside, a break above 99.03 (100-day SMA) would aim for 99.98 (high May 25) and finally 100.56 (monthly high May 14).
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