US Dollar Index trims losses and tests 96.60

DXY bounces off lows in the 96.40/35 band on Monday.
Focus remains on the advance of the COVID-19 pandemic.
Monthly Budget Statement, Fed’s Williams next on tap.

Pablo Piovano FXStreet

The greenback, when tracked by the US Dollar Index (DXY), has managed to regain some poise and rebound from earlier lows in the 96.40/35 band.

US Dollar Index looks to the pandemic, risk-trends

The index has started the week on the negative note although it manages well to fade part of the initial pessimism following the opening bell in Europe on Monday.

In the meantime, investors’ attention remains on the unremitting progress of the coronavirus pandemic and the potential impacts on the gradual re-opening of the economy.

Later in the US data space, the Monthly Budge Statement will be the only release of note, while New York Fed J.Williams (permanent voter, centrist) is due to speak as well.

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 losing 0.04% at 96.62 and faces the next contention at 96.24 (monthly low Jul.9) seconded by 96.03 (50% Fibo of the 2017-2018 drop) and then 95.72 (monthly low Jun.10). On the other hand, a break above 97.80 (weekly high Jun.30) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.25 (200-day SMA).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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