DXY INDEX PRICE OUTLOOK: US DOLLAR TURNS TO CONSUMER CONFIDENCE DATA, IMPACT OF CORONAVIRUS
- The US Dollar dropped by 0.25% on balance according to the DXY Index
- USD price action comes under pressure amid ebbing volatility and eroding safe-haven demand
- US Dollar might rise if consumer confidence data indicates coronavirus concerns linger
The US Dollar is starting the week on its back foot with the DXY Index coming under pressure slightly. USD price action edged lower by about 0.25% on balance judging by DXY Index, which broadly reflects US Dollar performance against other major currencies.
US DOLLAR – DXY INDEX PRICE CHART: DAILY TIME FRAME (26 DECEMBER 2019 TO APRIL 27 2020)
Chart created by @RichDvorakFX with TradingView
After hitting resistance around the 100.80 price level during Friday’s trading session, and failing to form a second-consecutive higher high, US Dollar downside stretched lower on Monday. The DXY Index is currently perched slightly above two notable technical support levels: the US Dollar’s 9-day exponential moving average as well as the 38.2% Fibonacci retracement of its most recent bullish leg.
US DOLLAR IN FOCUS WITH CONSUMER CONFIDENCE INDEX SET TO DROP AS CORONAVIRUS LOCKDOWN ROILS SENTIMENT
The Conference Board’s Consumer Confidence Index is very similar to the University of Michigan’s Consumer Sentiment Index. The two consumer surveys differ slightly in timing, size, and scope, but the two economic indicators typically move in tandem with one other. That said, primarily due to the coronavirus and likely unavoidable recession, consumer confidence and consumer sentiment both plunged sharply since February.
Following a 30% rebound in stocks as Fed liquidity gushes, however, market participants are due to get a fresh look at how consumers feel about the US economy tomorrow. The Conference Board Consumer Confidence Index is due Tuesday, April 28 at 14:00 GMT. If the upcoming release of consumer confidence data reveals that coronavirus concerns linger, it could bode well for the US Dollar.
This is considering the status held by the US Dollar as a top safe-haven asset, which tend to outperform during periods of heightened risk-aversion. On the contrary, a constructive recovery in consumer confidence might add to recent weakness experienced by the US Dollar. This comes as coronavirus optimism bests coronavirus pragmatism. Also noteworthy, the Federal Reserve is anticipated to take the spotlight later this week and could have a material impact on the broader direction of USD price action.
Keep Reading – US Dollar Forecast: Fed, Coronavirus Guidelines & Earnings Eyed
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
