US Dollar Index Tumbles: New Lows At 98

EDITOR NOTE: The USD is losing ground: but against what? It's value is manipulated (on the short term) by the Fed which has, for all practical purposes, cornered the market. In reality, there is no "market."

The greenback, in terms of the US Dollar Index (DXY), is shedding further ground at the beginning of the week and is now putting the 98.00 mark to the test.

US Dollar Index looks to data

The index is losing ground for the fifth consecutive session on Monday, challenging the key support at 98.00 the figure and opening the door to a potential test of the Fibo retracement (of the 2017-2018 drop) at 97.87.

In the meantime, investors continue to assess the rising protests in several US cities amidst the coronavirus pandemic and increasing risks of further contagion.

In the US data space, the most salient event on Monday will be the ISM Manufacturing seconded by the final manufacturing PMI gauged by Markit for the month of May.

What to look for around USD

The greenback remains under heavy pressure at the beginning of the month, threatening to extend the downtrend well below the 98.00 mark against the backdrop of firm risk-on sentiment. In the meantime, the dollar remains vigilant on the US-China trade front, the gradual return to some sort of normality in the US economy and the broader risk appetite trends as main drivers of the price action. On the constructive stance around the buck, it remains the safe haven of choice among investors, helped by its status of global reserve currency and store of value.

US Dollar Index relevant levels

At the moment, the index is retreating 0.36% at 97.94 and faces the next support at 97.89 (monthly low Jun.1) followed by 97.87 (61.8% Fibo of the 2017-2018 drop) and then 97.35 (low Jan.31). On the upside, a break above 98.50 (200-day SMA) would aim for 99.04 (100-day SMA) and finally 99.98 (high May 25).

Originally posted on FXStreet