US Dollar Index tumbles to fresh 3-month lows near 97.40

The greenback remains well on the defensive so far this week and is now dragging the US Dollar Index (DXY) to the 97.40/35 band, or new 3-month lows.  |  03/06/2020 08:11
  • DXY accelerates the downside to the 97.40 area on Wednesday.
  • Optimism on the re-opening of the economy bolsters the risk-on mood.
  • US ADP report, Factory Orders, ISM Non-Manufacturing next of relevance.

The greenback remains well on the defensive so far this week and is now dragging the US Dollar Index (DXY) to the 97.40/35 band, or new 3-month lows.

US Dollar Index focused on risk trends and data

The index keeps its march south unabated for the seventh session in a row on Wednesday and is already visiting levels last seen in mid-March around 97.40, always in the current context of preference for the riskier assets.

In fact, investors appear to favour the ongoing optimism surrounding the gradual re-opening of the economy, relegating – at least in the very near-term – concerns on the US-China trade front and the recent civil protests.

Later in the docket, the ADP report comes first seconded by the ISM Non-Manufacturing and Factory Orders. In addition, the EIA will publish its weekly report on US crude oil supplies.

What to look for around USD

The greenback remains under heavy pressure at the beginning of the month, prolonging the downtrend well below the 98.00 mark and always against the backdrop of the solid risk-on sentiment in the global markets. In the meantime, the dollar remains vigilant on the US-China trade front, the gradual return to some sort of normality in the US economy and the broader risk appetite trends as main drivers of the price action. 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 losing 0.36% at 97.55 and faces immediate contention at 97.33 (monthly low Jun.3) followed by 97.11 (monthly low Nov.1 2019) and finally 96.33 (monthly low Dec.31 2019). On the other hand, a breakout of 98.49 (200-day SMA) would aim for 99.04 (100-day SMA) and finally 99.98 (high May 25).

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