US Dollar Index tests daily highs beyond the 97.00 mark

  • DXY pushes higher above the key 97.00 mark on Monday.
  • Riskier assets continue to lose ground at the beginning of the week.
  • Empire State Index, Net Capital Flows, Fedspeak next on the docket.

The greenback, when tracked by the US Dollar Index (DXY), is prolonging the upside momentum at the beginning of the week and is looking to consolidate the breakout of the 97.00 barrier.

US Dollar Index looks to data, risk trends

The index is extending the rebound from recent multi-month lows in sub-96.00 levels and is posting gains for the third consecutive session on Monday, always on the back of the improved sentiment surrounding the buck.

The better tone in the dollar in past sessions came after investors re-assessed the negative economic view of the Federal Reserve at its meeting on Wednesday along with fears of a second wave of the coronavirus. Therefore, DXY managed to reverse somewhat the sharp decline recorded in late May/early June.

Moving forward, the NY Empire State Index will give a hint of how the regional manufacturing sector fared in this month. In addition, TIC Flows are due along with Net Capital Flows and the speech by San Francisco Fed M.Daly (2021 voter, centrist).

What to look for around USD

The index keeps improving on Monday amidst renewed concerns over a probable second wave of coronavirus contagion while the gloomy view on the economy from the Fed last week also collaborated with the pick-up in the buying interest in the buck as of late. Other than that, and as usual in past weeks, price action around DXY is expected to track the performance of the broad risk appetite trends, US-China trade developments and the progress on the re-opening of the economy. 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.

US Dollar Index relevant levels

At the moment, the index is gaining 0.19% at 97.27 and a breakout of 97.87 (61.8% Fibo of the 2017-2018 drop) would aim for 98.42 (200-day SMA) and finally 98.97 (100-day SMA). On the downside, immediate contention emerges at 95.72 (monthly low Jun.10) followed by 95.03 (2019 low Jan.10) and then 94.65 (2020 low Mar.9).



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