OctaFX | OctaFX Forex Broker
Open trading account

US Dollar Index turns positive above 98.80, looks to Powell

  • DXY trims earlier losses and approaches the 98.90 region.
  • All the attention is on Powell’s second testimony later in the session.
  • Monthly Budget Statement will close the docket later on Wednesday.

The US Dollar Index (DXY), which tracks the buck vs. a bundle of its main competitors, has now recovered some poise and approach the key 98.90 area.

US Dollar Index looks to Powell, risk trends

The dollar has faded the initial pessimism after an improved mood in the riskier assets lent extra wings to its rivals (euro, yen, sterling), sending the index to the area of daily lows near 98.70, where some decent support appears to have emerged.

Indeed, concerns around the COVID-19 (Chinese coronavirus) continued to ease as the pace of contagion in several Chinese cities lost pace in past hours, all fuelling further the risk appetite trends.

Later in the US calendar, Chief J.Powell will testify again, this time before the Senate Banking Committee. In addition, the EIA will report on US crude oil inventories and the Monthly Budget Statement will also be published.

What to look for around USD

The index extended the rally to the vicinity of 99.00 at the beginning of the week, levels last traded in October 2019. The recently published semi-annual Monetary Policy Report by the Fed showed an upbeat assessment of the economy and a resilient financial system. Following a neutral/dovish message from the FOMC at its latest meeting, investors should keep looking to the performance of US fundamentals and the broader risk appetite trends for direction as well as any fresh developments from the COVID-19. In the meantime, the outlook on the buck remains constructive and bolstered by the current ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the ‘good shape’ of the domestic economy, 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 0.08% at 98.83 and a breakout of 98.95 (2020 high Feb.11) would aim for 99.00 (psychological mark) and finally 99.37 (high Sep.3 2019). On the other hand, initial contention emerges at 98.19 (high Jan.29) seconded by 97.87 (68.2% Fibo of the 2017-2018 drop) and then 97.74 (200-day SMA).

Fed's Daly: Economy in a good place to weather storms right now

"The US economy has faced headwind after headwind," San Francisco Federal Reserve Bank President Mary Daly noted but said that it was in a good place
Read more Previous

USD/CHF Price Analysis: Greenback vulnerable below 0.9770 vs. Swiss franc

USD/CHF is retracing down from the 2020 highs while the quote is trading below the 100/200-day simple moving averages suggesting an overall bearish bias.
Read more Next
Start livechat