Dollar Index’ advance stalls below 97.65 resistance area
- US Dollar Index appreciates 0.4% on the week to test resistance at 97.65.
- The greenback appreciates on fears about a second COVID-19 wave and geopolitical frictions in Asia.
- Later today FED Chairman Powell’s speech will be closely monitored.
The US dollar is pushing higher against a basket of the most traded currencies, on track to complete its best week since mid-May. The moderate risk-off tone witnessed this week has favoured the greenback, which appreciated about 0.5% through the week, to hit two-week highs at 97.71, before stalling right below 97.60 resistance area.
Dollar gains on COVID-19 fears and geopolitical tensions
Fears about the potential impact of a second COVID-19 wave on economic recovery have crushed appetite for risk this week, increasing demand for safe-havens like the US dollar. The increase in the number of infections in many US states and Beijing efforts to stem a new outbreak have dampened the hopes of a quick post-pandemic recovery that supported the risk rally seen in previous weeks.
Furthermore, the geopolitical frictions between India and China in their Himalayas border have increased investors’ fears in spite of the recent efforts by the two Asian atomic powers to deescalate tensions.
Later today, all eyes will be on Federal Reserve’s Chairman, Jerome Powel, who is expected to take part in a virtual discussion at the Cleveland Fed. His comments about the post-coronavirus recovery and the economic outlook might have a significant impact on the US dollar.
DXY pushing against 97.65 resistance level
The USD ticked about 0. 15% up so far today to reach resistance at 97.65 (un 4 high). Above here, the pair might head towards 97.87 (612.8 Fibonacci retracement of the 2017-2018 decline) and then the 200-day SMA, at 98.39. On the downside, initial support lies at 97.40/45 (Jun 12, 15 highs) and below here, intra-day highs at 97.17 and 96.45 (Jun 12, 15 lows).
DXY key levels to watch