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US Dollar Index pulls back from three-year high, revisits sub-102.50 zone

  • DXY takes clues from downbeat headlines from the US.
  • NYC Mayor anticipates a lack of medicines, Governor of California issues a state-wide stay at home order, Goldman anticipates record jobless claims.
  • US Treasury yields recover with Asian stocks while the US futures remain on the back foot.
  • Eyes on the Trump administration’s $1.3 trillion stimulus, coronavirus news.

Following its run-up to the highest since January 2017, the US Dollar Index (DXY) declines to 102.11, down 0.58%, amid the Asian session on Friday.

Although broad risk-off, mainly due to the coronavirus (COVID-19) fears seems to favor the greenback, together with the global rush to combat the disease, the recently worrisome signs from the US seem to weigh on the US dollar gauge.

The New York City Mayor cited fears of medical supply shortage during the early-Asia whereas the latest news from California mentions that Governor’s order to stay at home.

Further, Goldman Sachs anticipates US jobless claims to reach the record high of 2.25 million mainly due to the deadly virus. The news drew strength from the previous comments from the US Treasury Secretary Steve Mnuchin that the inaction could propel the Unemployment Rate to 20.0%.

Market’s risk-tone remains light amid the US Treasury’s recovery moves beyond 1.15% and mostly positive Asian stocks.

Going forward, today’s US Existing Home Sales can decorate the economic calendar but the COVID-19 headlines will keep acting as the showstopper. Recently, Gilead's Remdesivir medicine is being tested to cure Covid-19. If the development offers positive results, this could be a good boost to the market’s trade sentiment and might work against the greenback.

Technical Analysis

Unless providing a daily closing below February month top near 99.90, the greenback gauge is likely a threat to the year 2017 high of 103.82.

 

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