US Dollar Index extends the consolidation above 97.00 ahead of key data
- DXY stays within a consolidative mood above the 97.00 mark.
- Markets’ focus remains on the developments from the coronavirus.
- US ADP report, ISM Manufacturing, FOMC next of relevance in the docket.
The greenback, when gauges by the US Dollar Index (DXY), is prolonging the side-lined theme above the 97.00 mark for yet another session on Wednesday.
US Dollar Index now looks to data
The index keeps navigating within a rangebound pattern in place since mid-June and always capped by the 97.90 region, where coincide recent tops and a Fibo level (of the 2017-2018 drop).
As usual, investors continue to closely follow the developments around the coronavirus and its impact on the economy. Indeed, the pandemic carries the potential to slow down the pace of the ongoing recovery and could sustain further bouts of risk aversion, which should ultimately lend extra legs to the buck.
In the US data space, the ADP report, the ISM Manufacturing and the final print of Markit’s Manufacturing PMI are all expected to rebound from May’s readings. In addition, the FOMC will publish its minutes of the latest meeting and Chicago fed C.Evans (2021 voter, centrist) is due to speak.
What to look for around USD
The unremitting advance of the pandemic in the US remains in centre stage amidst efforts to keep the re-opening of the economy well in place. As always, the broad risk appetite trends emerge as the main driver for the dollar in the short-term coupled with omnipresent US-China trade effervescence. On the constructive stance around the buck, 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. Playing against this, the ongoing (and potentially extra) stimulus packages by the Federal Reserve could limit the dollar’s upside.
US Dollar Index relevant levels
At the moment, the index is losing 0.03% at 97.36 and faces the next contention at 96.39 (weekly low Jun.23) seconded by 96.03 (50% Fibo of the 2017-2018 drop) and finally 95.72 (monthly low Jun.10). On the other hand, a break above 97.80 (weekly high Jun.30) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.34 (200-day SMA).
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.
