US Dollar Index remains under pressure below 97.00

• DXY struggles for direction around the 96.70/80 region on Wednesday.
• US-China trade deal takes centre stage once again.
• Housing data, Fedspeak, EIA’s report next on the docket.

The greenback, in terms of the US Dollar Index (DXY), is attempting a rebound from recent lows in the vicinity of 96.40 on Wednesday.

US Dollar Index looks to trade, coronavirus

The index came to fresh weekly lows in the 96.40 area on Tuesday following the breakdown of the key support at 97.00 the figure amidst renewed concerns over the US-China trade war, hopes of a sharp economic recovery and rising coronavirus cases.

In fact, the dollar’s sell-off accelerated in the first half of the week after US advisor Peter Navarro said the US-China trade deal was ‘over’, all against the swelling effervescence between the two countries seen as of late.

However, investors appear to support the idea of a strong rebound in the economic activity despite COVID-19 cases in several US states continue to rise, all morphing into further legs to the risk complex.

Later in the session, MBA’s Mortgage Applications are due seconded by the House Price Index, the weekly report on US crude oil supplies by the EIA and speeches by Chicago Fed C.Evans (2021 voter, centrist) and St. Louis Fed J.Bullard (2022 voter, dovish).

What to look for around USD

Another pick-up in the risk complex hurt the greenback and forced the index to breach the 97.00 support in the early sessions of this week. In the meantime, price action around the dollar is expected to track the performance of the broad risk appetite trends, US-China trade developments and the progress of the re-opening of the economy. On the constructive stance around the buck, 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 0.05% at 96.73 and a break above 97.74 (weekly high Jun.22) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.37 (200-day SMA). On the downside, initial support lines up at 96.39 (weekly low Jun.23) seconded by 96.03 950% Fibo of the 2017-2018 drop) and finally 95.72 (monthly low Jun.10).