USD May Rise on Wuhan Virus Risk Ahead of White House Budget
US Dollar Outlook, White House Budget Proposal – Talking Points
- US Dollar may rise on haven demand from coronavirus
- Greenback also eyeing White House 2021 budget report
- DXY technical analysis: when could the uptrend break?
The session started off on weak footing with the cycle-sensitive Australian Dollar falling alongside S&P 500 futures as fear about the coronavirus continued to infect market mood. The death toll is now at 805 and has completely eclipsed the number of fatalities during the SARS breakout. Australian Dollar-crosses were left unimpressed by better-than-expected year-on-year Chinese CPI statistics while APAC equities swam in red.
US DOLLAR EYES WHITE HOUSE 2021 BUDGET
The US Dollar will be closely watching the release of the White House budget for fiscal year 2021 ahead of the Presidential election in November. Policymakers are largely expecting for it to outline additional spending cuts after the Congressional Budget Office published a report that projected deficits to surpass $1 trillion over the next 10 years.
Regardless of whether or not his policies are market friendly are – at least for now – irrelevant, primarily because it is unclear whether he will be elected to serve for another four years. However, the nature of his economic plan may only begin to impact on markets if polls show him being able to secure another term. For a longer-term trading strategy, investors will scrutinize his policies to get a better idea of what to expect.
US DOLLAR TECHNICAL OUTLOOK
The US Dollar index (DXY) is struggling to break past the October high at 98.69 shortly after it remounted the January uptrend. The Greenback may now retreat to the upward-sloping support channel, though it is unclear whether the floor will crack under the weight of DXY’s failure to clear resistance. Consequently, the US Dollar is at risk of an aggressive selloff if the strength of the uptrend crumbles from selling pressure.
US Dollar – Daily Chart
US Dollar chart created using TradingView
US DOLLAR TRADING RESOURCES
- Tune into Dimitri Zabelin’s webinar outlining geopolitical risks affecting markets in the week ahead!
- New to trading? See our free trading guides here!
- Get more trading resources by DailyFX!
--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.