US Dollar Index bounces off lows, looks to regain 94.00
- 28th July 2020
- Posted by: Hakeem
- Category: FOREX LATEST NEWS DAILY, FOREX MARKET ANALYSIS
- DXY moves higher and approaches the 94.00 mark on Tuesday.
- The index comes back after hitting new 2-year lows around 93.50.
- Consumer Confidence, S&P/Case-Shiller Index next in the docket.
The greenback, when tracked by the US Dollar Index (DXY), is trading on a firm note and is looking to extend the rebound to the 94.00 neighbourhood on turnaround Tuesday.
US Dollar Index focused on data
After seven consecutive sessions with losses, the index is now giving some signs of life after recording new 2-year lows in the 93.50/45 band at the beginning of the week.
It will not surprise anyone to see the current rebound extending further, as DXY keeps navigating well into the oversold territory (RSI just above 22.0 at the time of writing), although the underlying bearish bias appears unchanged for the time being.
When we look at the broader picture, the positive risk appetite trends remain well in place among market participants, which stay largely focused on the progress of the reopening of the economy and the development of potential vaccines, therefore relegating to the backburner any concern regarding the unremitting advance of the coronavirus pandemic.
Later in the NA session, the Conference Board will publish its Consumer Confidence gauge seconded by house prices tracked by the S&P/Case-Shiller Index.
What to look for around USD
The relentless advance of the coronavirus pandemic in the US and across the world vs. the probability that a COVID-19 vaccine could be out in the medium-term plus the ongoing reopening of global economies are all driving the sentiment in the global markets while keeping the demand for the safe haven dollar well depressed. While bouts of risk aversion are seen supportive of the greenback, these seem quite unlikely, at least in the near-term, in the current context and therefore any rebound in DXY should be deemed as short-lived. On another front, the speculative community kept adding to the offered note around the dollar for yet another week, opening the door to a potential development of a more serious bearish trend in the dollar.
US Dollar Index relevant levels
At the moment, the index is gaining 0.18% at 93.82 and a break above 94.20 (38.2% Fibo of the 2017-2018 drop) would open the door to 96.03 (50% Fibo of the 2017-2018 drop) and finally 97.23 (55-day SMA). On the flip side, the next support is located at 93.48 (2020 low Jul.27) seconded by 93.19 (monthly low June 2018) and then 91.80 (monthly low May 18).