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US Dollar Index regains some ground near 97.50

  • DXY looks stabilized in the mid-97.00s.
  • Economic growth fears keep weighing on sentiment.
  • Initial Claims, EIA report, Kansas City index, all coming up next.

The greenback, in terms of the US Dollar Index (DXY), is trading slightly in the positive territory in the 97.60/55 band on Thursday.

US Dollar Index looks to risk trends

The index is posting some gains after three consecutive daily pullbacks and following the rejection from Friday’s new YTD highs just above 97.70, where sits the key 200-day SMA.

In the meantime, price action in the dollar continues to follow the developments from the recent outbreak in China of the Whuan coronavirus and the impact on the global economic growth. In this regard, the World Health Organization (WHO) could declare the virus as a global health emergency later today.

Later in the day, the US calendar looks quite light as usual weekly Claims are due seconded by the manufacturing gauge from the Kansas City Fed and the EIA’s report on US crude supplies. Additionally, the ECB will hold its first monetary policy meeting of the year followed by the usual Q&A session by President Lagarde.

What to look for around USD

DXY keeps the weekly rangebound theme unchanged for the time being, and still targets the key 200-day SMA in the 97.70 zone. In the meantime, news from the Chinese coronavirus and uncertainty regarding the US-China ‘Phase 2’ deal underpin bouts of risk aversion and maintain the buck under some pressure. On another scenario, the index should regain the constructive view above the 200-day SMA, always supported by the current ‘wait-and-see’ stance from the Fed (confirmed once again at the latest FOMC minutes) vs. the broad-based dovish view from its G10 peers, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the index is gaining 0.06% at 97.56 and a breakout of 97.71 (200-day SMA) would aim for 97.73 (2020 high Jan.20) and finally 97.87 (61.8% Fibo of the 2017-2018 drop). On the other hand, the next support lines up at 97.09 (weekly low Jan.16) followed by 96.36 (monthly low Dec.31) and finally 96.04 (50% Fibo of the 2017-2018 drop).

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