US Dollar Index in multi-week lows around 96.30
- DXY loses the grip and recedes to the 96.30/20 band.
- Improved risk-on sentiment forced the dollar to shed ground.
- Initial Claims, Wholesale Inventories next on tap in the docket.
The persistent better mood in the risk complex keep the greenback under pressure and drags the US Dollar Index (DXY) to fresh 4-week lows in the 96.30/20 band on Thursday.
US Dollar Index weaker on improved risk-on trade
The index is down for the second session in a row on Thursday following the firm change of heart among investors towards the riskier assets.
Indeed, market participants continue to focus on the ongoing economic recovery and better prospects in the longer run, relegating at the same time worries about the unabated advance of the coronavirus pandemic.
Later in the NA session, the usual weekly Claims are due seconded by Wholesale Inventories for the month of May and the speech by Atlanta Fed R.Bostic (2021 voter, centrist).
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 0.19% at 96.29 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 98.27 (200-day SMA).