US Dollar Index extends the drop to 100.60 ahead of data
- DXY grinds lower and re-visits the sub-101.00 area.
- US Senate passed the $2 trillion COVID-19 stimulus package.
- US Q4 GDP, flash Trade Balance, Initial Claims next on tap.
The US Dollar Index (DXY), which gauges the greenback vs. its main rivals, is extending the downside below the 101.00 mark on Thursday.
US Dollar Index focused on House, data
The index is losing ground for the third consecutive session on Thursday, extending the drop below the 101.00 mark and finding some support in the 100.60 region for the time being.
In the meantime, the dollar remains on the defensive so far this week, particularly following the recently announced stimulus package by the Federal Reserve (Monday) and the $2 trillion COVID-19 aid bill approved by the US Senate. On the latter, the bill will now face the House of Representatives on Friday.
In the US calendar, another revision of the Q4 GDP figures is due seconded by advanced Trade Balance results, while special attention will be on the weekly Initial Claims in light of the impact of the coronavirus on the US labour market.
What to look for around USD
DXY keeps correcting lower following another rejection of the 103.00 region, or 3-year highs, earlier in the week. Further stimulus measures announced by the Fed and the US government lifted spirits in the risk-associated space and put the buck under extra downside pressure. Last week’s sharp upside in the dollar has been sustained by the solid demand in response to funding concerns, while easing monetary conditions by central banks other than the Fed have been also collaborating with the upbeat sentiment around the greenback. In the meantime, developments from the coronavirus pandemic and the global response to fight its impacts are expected to keep driving the sentiment in the global markets.
US Dollar Index relevant levels
At the moment, the index is losing 0.13% at 100.80 and faces the next support at 100.49 (78.6% Fibo of the 2017-2018 drop) followed by 99.91 (monthly high Feb.20) and then 98.50 (55-day SMA). On the flip side, a breakout of 102.99 (2020 high Mar.20) would open the door to 103.65 (monthly high December 2016) and finally 103.82 (monthly high January 2017).
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.
