US Dollar Index Posts Best Week Since Coronavirus Pandemic; Targets 95.00
The US Dollar continues to attract bids this Friday, allowing the US Dollar index to extend the upside for the 5th session in six. Today’s bullish move puts the USD Index on the trail of achieving its best weekly performance since the coronavirus epidemic in the US broke out in March 2020.
Expectations of a recovery in annualized GDP by 30% in Q3 following the steep contraction of Q2 is attracting flows into the greenback. However, as analysts at S&P Global note, significant headwinds persist as there is still no coronavirus vaccine available. US-China trade tensions and the non-passage of a renewed stimulus package continues to dampen sentiment.
Next week features key jobs data, as the US Labor market also searches for signs of improvement despite consistently high unemployment claims.
Technical Outlook for DXY
The US Dollar index is presently challenging the resistance at 94.62, having tested it the previous day without a successful break. If this attempt at a breakout succeeds, then 95.19 becomes the next logical target. Other targets to the north are 95.72 and 96.07, with 96.46 constituting a significant resistance.
On the flip side, failure to re-establish a penetration close above the current resistance may allow sellers to return to the fray, with 93.80 and 93.17 constituting the immediate support targets. The Non-Farm Payrolls data comprises the major news for next week, and this could define the medium-term direction of the asset going forward.