US Dollar Index losing the grip and eases to 100.50/40

  • DXY retreats from tops just below the 101.00 mark.
  • Focus remains on COVID-19 and its impact on the economy.
  • Fed’s Consumer Credit figures next on the docket.

The greenback, in terms of the US Dollar Index (DXY), seems to have met some important resistance in the vicinity of the 101.00 mark on Monday, sparking the ongoing retracement to the 100.50 region.

US Dollar Index looks to coronavirus, risk trends

After four consecutive daily advances, including fresh multi-day peaks in the boundaries of the 101.00 mark on Monday, the index met some resistance and triggered a corrective downside to the current 100.50/40 band.

In the meantime, a fresh wave of appetite for riskier assets has emerged as of late following renewed optimism in the Old Continent, as the coronavirus pandemic continues to lose traction particularly in Spain and Italy. Across the pond, however, the US is bracing for a hard impact as infected cases and deaths are expected to reach maximum levels in the next days.

Later in the US data space, the only release of note will be the Fed’s Consumer Credit figures ahead of Initial Claims, Producer Prices and the advanced gauge of the Consumer Sentiment, all due on Thursday amidst the shortened trading week due to the Easter holidays.

What to look for around USD

DXY remains bid above the 100.00 mark despite Tuesday’s corrective downside and following last week’s lows in the 98.30 region. In the meantime, attention remains on the progress of the COVID-19 in the US and the impact on the economy, which is seen slipping back into recession later this year. On the supportive side for the buck, market participants seem to prefer the dollar vs. other safe havens like the Japanese yen and the Swiss franc in cases when risk aversion kicks in, all helped by its status of “global reserve currency” and store of value.

US Dollar Index relevant levels

At the moment, the index is retreating 0.35% at 100.44 and faces the next support at 99.91 (monthly high Feb.20) followed by 98.27 (weekly low Mar.27) and then 98.11 (200-day SMA). On the other hand, a break above 100.93 (weekly/monthly high Apr.6) would open the door to 101.34 (monthly high Apr.10 2017) and finally 102.99 (2020 high Mar.20).

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