US Dollar Index remains bid and approaches 101.00

The greenback, in terms of the US Dollar Index (DXY), is extending the upbeat momentum and trades closer to the key barrier at 101.00 the figure.

US Dollar Index looks to COVID-19 developments

The index is advancing for the fourth consecutive session at the beginning of the week, looking to reclaim the key 101.00 mark for the first time after two weeks.

In the meantime, the developments from the coronavirus continue to dictate the sentiment in the global markets and the US economy, particularly after the disappointing figures from the US labour market published on Friday.

In fact, it is worth recalling that the US economy lost 701K jobs in March – the first contraction since 2010 - and the unemployment rate ticked higher to 4.4%. While these results have been largely anticipated, the worst for the labour market could be in the pipeline, especially considering that around 10 million US citizens filed for unemployment benefits in the last couple of weeks, according to weekly Initial Claims.

There are no data releases scheduled on Monday, while Initial Claims and the advanced Consumer Sentiment for the current month, both due on Thursday, will be the salient publications.

What to look for around USD

DXY remains bid in the upper 100.00s so far, extending the rebound from last week’s lows in the 98.30 region. In fact, market participants seem to prefer the dollar vs. other safe havens like the Japanese yen and the Swiss franc in a context of prevailing risk aversion, all in response to unabated concerns surrounding the coronavirus and its impact on the economy. Further support for the buck comes from its status of “global reserve currency” and store of value.

US Dollar Index relevant levels

At the moment, the index is gaining 0.03% at 100.72 and a breakout of 100.85 (weekly/monthly high Apr.3) would open the door to 101.34 (monthly high Apr.10 2017) and finally 102.99 (2020 high Mar.20). On the other hand, the next support emerges at 100.49 (78.6% Fibo retracement of the 2017-2018 drop) followed by 98.27 (weekly low Mar.27) and then 98.09 (200-day SMA).