US Dollar Index trades flat around 96.50 ahead of Powell, data

• DXY trades within a tight range in the mid-.96.00s on Tuesday.
• Chief J.Powell Semi-annual testimony next of relevance later.
• Retail Sales, Industrial Production also in the limelight in the NA session.

The greenback, in terms of the US Dollar Index (DXY), is trading within a narrow range in the 96.50 ahead of key events in the US data universe.

US Dollar Index focused on data, Fed

The index is trading on a cautious mode on turnaround Tuesday, navigating the lower end of the weekly range so far following the negative price action charted at the beginning of the week.

In fact, the dollar’s rebound lost momentum on Monday after the Federal Reserve said it will pump in more money into the system, this time via the Secondary Market Corporate Credit Facility (SMCCF). The Fed’s announcement gave extra legs to the riskier assets and motivated US stocks to reverse the initial pessimism.

Later in the session, Fed’s J.Powell will testify before the Senate Banking Committee in what will be the most salient event. Additionally, Retail Sales for the month of May are due seconded by Industrial/Manufacturing Production, Capacity Utilization, the NAHB index and April’s Business Inventories.

What to look for around USD

The index met some selling interest on Monday in response to further easing by the Fed, relegating recent concerns over a probable second wave of coronavirus contagion and the impact on the economy. Other than that, and as usual in past weeks, price action around DXY is expected to track the performance of the broad risk appetite trends, US-China trade developments and the developments from 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 losing 0.01% at 96.61 and faces initial contention at 95.72 (monthly low Jun.10) followed by 95.03 (2019 low Jan.10) and then 94.65 (2020 low Mar.9). On the flip side, a break above 97.45 (high Jun.12) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.41 (200-day SMA).