US Dollar Index recovery attempt from 96.80 stalls below 97.35
- Dollar Index recovery from 96.80 has been limited below 97.35
- The dollar remains on the backfoot amid hopes of a quick economic recovery.
- The DXY has depreciated about 0.5% in the last two weeks.
Greenback's rebound from one-week lows at 96.80 is lacking follow-through above the 97.00 level and the Index has stalled below 97.35. The USD recovery witnessed earlier on Friday has lost steam during a quiet American session, with the US equity markets closed for the Independence Day bank holiday.
Post-pandemic recovery hopes are holding the USD down
The US dollar opened the day on a strong footing, fuelled by a moderate risk-off sentiment during the Asian and European sessions. The record increase of coronavirus cases in the US revived fears of a second wave of lockdowns that would curb economic recovery and eased investors’ optimism after Thursday’s upbeat US Non-Farm payrolls data and the bright Chinese services sector activity seen earlier today.
On a longer-term perspective, however, the US dollar remains in a steady downtrend after peaking at 103.00 in mid-March. Investors’ hopes on a quick economic recovery, reflected on the equity markets’ rally, have curbed demand for the safe-haven USD, in favor of riskier assets. In this backdrop, the dollar is set for the second negative week in a row against a basket of the most traded currencies.
Key technical levels
On the upside, above 97.35 session highs, the pair might aim towards 97.70 (Jun. 21, 30 highs) and 98.15 (50% Fibonacci retracement of the May-June decline. On the downside, immediate support lies at 96.80 (Jul. 2 low) and below here, 96.40 (Jun. 26 low) and 95.70 (Jun. 10 low).
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
