US Dollar Index remains under pressure near 96.00 ahead of key data

15 Jul 2020, 16:52 · Views 1,081

DXY struggles for direction and trades close to the 96.00 level.
Risk appetite trends continue to weigh on the dollar on Wednesday.
Industrial Production, NY Empire State index next of relevance.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, is wobbling around the 96.00 neighbourhood on Wednesday.

US Dollar Index looks to risk trends, data

The index briefly tested lows in the 96.00 region – coincident with a Fibo level – and is now struggling for direction against the backdrop of investors’ preference for riskier assets.

In fact, Tuesday’s news involving the progress of a vaccine candidate developed by US biotech Moderna (NASDAQ: MRNA) seems to have boosted traders’ morale accentuated the selling bias in the buck in favour of its riskier peers.

Later in the US docket, MBA’s Mortgage Applications are due in first turn seconded by the NY Empire State index, Industrial/Manufacturing Production, Capacity Utilization, Export/Import Prices and the EIA’s weekly report on crude oil supplies. In addition, the Fed will publish its Beige Book and Philly Fed T.Harker (voter, hawkish) is due to speak.

What to look for around USD

The relentless advance of the COVID-19 pandemic in the US and across the world vs. news of a potential vaccine that could be developed before markets’ expectations plus the ongoing reopening of global economies are all driving the sentiment in the global markets and keep the dollar under pressure. On the constructive view of the dollar, 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.

US Dollar Index relevant levels

At the moment, the index is losing 0.07% at 96.12 and faces the next support at 96.06 (monthly low Jul.15) 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 98.22 (200-day SMA).

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