US Dollar Index loses momentum and returns below 97.00

  • DXY meets resistance in the 97.15/20 band on Tuesday.
  • FOMC’s R.Bostic said the pandemic could hurt the US recovery.
  • JOLTs Job Openings, IBD/TIPP index, API report next on tap.

The US Dollar Index (DXY), which measures the greenback vs. a basket of its main rivals, is losing upside momentum and slips back to the sub-97.00 area following the opening bell in Wall St.

US Dollar Index sticks to gains around 96.80

The index survives in the positive territory around 96.80 on Tuesday, advancing for the first time following two consecutive pullbacks and always suffering the better tone in the risk-associated universe seen as of late.

However, the progress of the COVID-19 pandemic in the US in combination with fresh outbreaks in Europe appear to have sustained recent inflows into the safe havens as well as a return of the risk aversion and the cautious tone among traders.

On the latter, Atlanta Fed R.Bostic (2021 voter, centrist) said that the current pandemic carries the potential to undermine the ongoing recovery.

Moving forward, the IBD/TIPCC index, JOLTs Job Openings and the API’s weekly report on crude supplies are next on tap along with speeches by FOMC’s R.Quarles (permanent voter, centrist), Richmond Fed T.Barkin (2021 voter, centrist) and San Fracisco Fed M.Daly (2021 voter, centrist).

What to look for around USD

The progress of the COVID-19 in the US remains in the centre of the debate 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 and geopolitical 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 gaining 0.04% at 96.81 and a surpass of 97.80 (weekly high Jun.30) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.30 (200-day SMA). On the flip side, the next support emerges at 96.57 (weekly low Jul.6) seconded by 96.39 (weekly low Jun.23) and finally 96.03 (50% Fibo of the 2017-2018 drop).

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