US Dollar Index moves to weekly peaks around 97.70 ahead of Powell

  • DXY resumes the upside and tests highs in the 97.70/75 band.
  • Investors keep gauging the rising COVID-19 cases vs. economic performance.
  • Fed’s J.Powell will testify at the House of Representatives.

The US Dollar Index (DXY), which measures the greenback vs. a bundle of its main competitors, has resumed the upside on Tuesday and is approaching the key resistance area at the 97.90 region.

US Dollar Index looks to Powell, coronavirus

The index has quickly left behind Monday’s inconclusive price action and is posting decent gains on ‘turnaround’ Tuesday, trading at the same time at shouting distance from the critical resistance area around 97.90. It is worth recalling that in this area converges a Fibo level (of the 2017-2018 drop) and recent tops.

In the broader picture, investors and the risk appetite trends continue to gauge the unremitting advance of the coronavirus pandemic vs. the progress of the re-opening of the economy.

Later in the session, Chief J.Powell will testify on ‘Coronavirus Aid, Relief and Economic Security Act’ before the Committee on Financial Services. In addition, New York Fed J.Williams (permanent voter, centrist) is due to speak seconded by Atlanta Fed R.Bostic (2021 voter, centrist) and Minneapolis Fed N.Kashkari (voter, dovish). Still with Fedspeak, permanent voter and dovish member L.Brainard will participate in a discussion panel in Michigan.

In the US data space, the attention will be on the Conference Board’s Consumer Confidence gauge followed by the S&P/Case-Shiller Index and the weekly report on US crude supplies by the API.

What to look for around USD

The re-emergence of the risk aversion in response to COVID-19 developments and trade jitters have lent extra support to the dollar in past sessions. In the meantime, price action around the buck is expected to track the performance of the broad risk appetite trends, US-China trade developments and the progress of the re-opening of the economy. 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 advancing 0.23% at 97.69 and a break above 97.74 (weekly high Jun.22) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.35 (200-day SMA). On the other hand, the next support is located 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).

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