Pound and Euro Weakness vs USD Boosts USD Index

Weakness on the Euro and the Pound this Friday has helped the USD Index to achieve recovery for the week. The USD Index is up 0.16% and looking to end the week on a high with four consecutive winning days. 

Boosting the DXY was the late recovery of the US Dollar on the week after the Euro, British Pound and Aussie Dollar all floundered on Thursday and Friday. Australia’s dismal jobs report set the stage for the Pound and Euro, which also struggled as the BoE delivered a dovish outcome to their MPC meeting and EU leaders failed to reach a consensus the EU Economic Summit to work out a coronavirus recovery fund on Friday. 

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Technical Outlook for DXY

The DXY is presently testing resistance at 97.71, after pushing up from the previous support level at 97.16. This resistance represents the 38.2% retracement from the down move which started on 24 April and bottomed on 10 June 2020. A break above this resistance enables the DXY to target the 98.19 upside target. Further resistance targets are found at 98.60, 98.93 (50% Fibonacci retracement) and 99.42. Strong USD recovery is required to make the attainment of these price levels a reality. 

On the flip side, rejection at 97.71 could spur a renewal of the downtrend, which targets 97.16 and 96.46. 95.72 remains a viable target, which will depend on a significant weakening of the US Dollar, as was seen in early June 2020.

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