US Dollar Index looks firmer, reclaims 99.00 and beyond

  • DXY regains composure after dropping to the 98.60.55 band.
  • US-China trade war is back to the fore sustains the upside.
  • US March’s Factory Orders only of note the US docket.

After bottoming out near the 98.50 level earlier in the Asian trading hours, the greenback has regained composure and reclaimed the 99.00 mark and bwyond when tracked by the US Dollar Index (DXY).

US Dollar Index focused on US-China trade

The index is charting a bullish outside day at the beginning of the week, trading on a solid footing beyond the 99.00 mark on the back of the resumption of the US-China trade effervescence.

In fact, President Trump has renewed his criticism over the mishandling of the COVID-19 pandemic by China, hinting at the likeliness that further tariffs could be in the pipeline to be announced any time soon. In fact, it is worth recalling that Larry Kudlow, the White House’s economic advisor, said on Friday that China would be “held accountable” for the coronavirus outbreak.

The news gave extra oxygen to the buck via the resumption of the risk aversion sentiment in the global markets, lifting DXY back to the area of 2-day highs beyond 99.00 the figure. In addition, the better-than-expected ISM Manufacturing for the month of April published on Friday have been also lending support to the dollar.

Later in the NA session, Factory Orders for the month of March will be the only release of note.

What to look for around USD

The weak note in the greenback seems to have met contention near 98.50 so far. In the meantime, investors have now shifted the attention back to the US-China trade war, while the country keeps planning the gradual re-opening of the economy. Supporting the momentum around the greenback emerges the current “flight-to-safety” environment, helped by its status of “global reserve currency” and store of value. On another front, and following the FOMC event, the Fed is expected to stay on the loose side of the monetary policy stance, at least until the coronavirus crisis abates.

US Dollar Index relevant levels

At the moment, the index is gaining 0.70% at 99.37 and a break above 100.49 (78.6% Fibo of the 2017-2018 drop) would aim for 100.93 (weekly/monthly high Apr.6) and finally 101.34 (monthly high Apr.10 2017). On the other hand, the next support lines up at 98.57 (weekly low May 4) followed by 98.34 (200-day SMA) and then 97.87 (61.8% Fibo of the 2017-2018 drop).

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