- DXY trades near YTD highs just below he 98.00 mark.
- Wuhan virus keeps weighing on global sentiment.
- FOMC, GDP, PCE to take centre stage later this week.
The greenback, when tracked by the US Dollar Index (DXY), is trading on a cautious tone in the area of yearly highs just below the 98.00 mark.
US Dollar Index focused on data, virus
The index has started the week slightly on the defensive, shedding some ground following Friday’s new yearly highs in levels just shy of the key barrier at 98.00 the figure.
The dollar’s tight range follows the cautiousness in the global markets in response to the unremitting advance of the Wuhan coronavirus, which already killed over 80 people in China and continues to spread.
Developments surrounding the outbreak of the virus in China have prompted market participants to lean towards the safe haven universe, dragging US yields lower and therefore keeping the buck under pressure.
Nothing worth mentioning data wise in the US docket on Monday, while all the attention will be on the FOMC meeting (Wednesday) seconded in relevance by the Conference Board’s Consumer Confidence gauge (Tuesday), advanced Q4 GDP figures (Thursday) and inflation figures tracked by the PCE (Friday).
What to look for around USD
DXY extended the recent breakout of the key 200-day SMA to the proximity of the 98.00 mark, where it has lost some upside momentum for the time being. In the meantime, news from the Chinese coronavirus and uncertainty regarding the US-China ‘Phase 2’ deal underpin occasional bouts of risk aversion and maintain the dollar under scrutiny. On another scenario, the index keeps the positive view above the 200-day SMA, always supported by the current ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the dollar’s safe haven appeal and its status of ‘global reserve currency’. Later in the week, key US data releases are expected to rule the sentiment around the index in the very near term.
US Dollar Index relevant levels
At the moment, the index is losing 0.01% at 97.88 and is expected to meet the next support at 97.71 (200-day SMA) seconded by 97.55 (55-day SMA) and then 97.09 (weekly low Jan.16). On the flip side, a break above 97.95 (2020 high Jan.24) would aim for 97.54 (monthly high Nov.29 2019) and finally 98.93 (high Aug.1 2019).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.