US Dollar Index bounces off lows, looks to reclaim 96.00 and above

• DXY comes back after bottoming out in monthly lows near 95.70.
• Sellers turned up around EUR/USD, adding to USD-buying.
• Housing data, Initial Claims, Markit’s PMIs due later in the week.

The greenback, in terms of the US Dollar Index (DXY), is now regaining some poise near the key barrier at 96.00 the figure.

US Dollar Index vigilant on EU Summit, risk trends

The index met some decent support in the key 95.70 contention area (June/July lows), managing to regain some buying traction and re-test the 96.00 neighbourhood on the back of the renewed offered bias mainly in EUR/USD.

In fact, EUR/USD has given away initial gains and returned to the negative ground amidst increasing unease ahead of the EU Summit, where funding for economies hit by the pandemic will be once again on top of the agenda.

No data in the US docket today should leave all the attention to the housing sector, the usual weekly report on the labour market and preliminary prints from Markit’s Manufacturing/Services PMIs, all to be released later in the week.

What to look for around USD

The relentless advance of the COVID-19 pandemic in the US and across the world vs. news of a potential vaccine that could be developed before markets’ expectations plus the ongoing reopening of global economies are all driving the sentiment in the global markets and keep the dollar under pressure. On the constructive view of the dollar, 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 gaining 0.02% at 96.02 and a break above 97.80 (weekly high Jun.30) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.19 (200-day SMA). On the other hand, initial support aligns at 95.73 (monthly low Jul.20) seconded by 94.65 (2020 low Mar.9) and then 94.20 (38.2% Fibo of the 2017-2018 drop).