Forex Focus on NFP

DXY: Here’s why the US dollar index is soaring today

The US dollar index (DXY) rose by more than 40 basis points after sliding sharply yesterday. This gain is mostly because of risk aversion as the number of coronavirus cases continue to rise in key countries. The US dollar has gained against all currencies in the index, including the Japanese yen, euro, and sterling.

US dollar gains as coronavirus risks rise

The US dollar index gained today mostly because investors are worried about coronavirus and its impacts on economies. The most important mover today is Australia, which saw the number of cases in Melbourne and Victoria rise sharply. As a result, the country is considering reinstating a lockdown in several states.

Before this, Australia has been viewed as a key success story in managing the disease. As a result, investors are worried that other countries that have reopened will see such increases.

Similarly, the number of new cases in the United States has continued to go up. In a statement yesterday, Dr. Fauci warned that the country was “knee-deep” in handling the crisis. He called the current situation serious even as Trump prepared for another rally.

Still, analysts are optimistic because the number of deaths has not grown as much. In the United States, while the number of total deaths has crossed 130,000, the chart has been relatively flat in the past few weeks. Indeed, the country reported just 378 deaths yesterday, which is lower than the peak of 2,750 reported in April.

Meanwhile, data from other countries has been relatively strong. For example, in Italy, retail sales rose by 24.3% in May while in the UK, house prices were relatively stable. And in Germany, the industrial production rose by 7.8% in May.

Later today, the US dollar index will depend on the JOLTs job openings number. This number measures the number of job vacancies that are in the country. In the previous month, the number of vacancies fell to a multi-year low of 5.04 million.

US dollar index technical analysis

The US dollar index is trading at 97.00, which is above yesterday’s high of 96.60. On the daily chart, the price is still below the 50-day and 100-day exponential moving averages. It is slightly above the 23.6% Fibonacci retracement level. Also, the price is also along the descending channel. Therefore, the price may still continue falling as bears attempt testing the next support at 96.00.

Alternatively, a move above last week’s high of 97.63 will invalidate this prediction. It will mean that there are more bulls in the market who will be interested in pushing it above 98.00, which is along the 50-day EMA.

Don’t miss a beat! Follow us on Telegram and Twitter.

US dollar index technical chart

US dollar index

More content

Related Posts: