US Dollar Index met support near 99.50 ahead of key data

• DXY looks to reverse the weekly decline around 99.50.
• The Fed left rates on hold on Wednesday but stays ready to act.
• Focus on Thursday will be on Initial Claims and PCE.

The weekly leg lower in the greenback appears to have met some decent support in the 99.50 region when tracked by the US Dollar Index (DXY). This area of contention is reinforced by the proximity of the 55-day SMA, today at 99.31.

US Dollar Index looks supported post-Fed, looks to data

The index is finally posting some gains early in the European morning following four consecutive daily pullbacks, as market participants continue to digest Wednesday’s FOMC meeting and gauge some positive developments around the coronavirus.

In fact, the Federal Reserve left the Fed Funds Target Range (FFTR) unchanged at the Wednesday’s meeting, matching the broad consensus. In addition, Chief Powell stressed the readiness to adjust the already running programmes in case of need, while there were no changes to guidance or forecasts.

In the US docket, the weekly Claims will be once again in the centre of the debate later on Thursday along with inflation figures measured by the PCE, Personal Income/Spending and the Chicago PMI.

What to look for around USD

The weak note in the greenback seems to have met contention around 99.50 so far this week, while traders keep tracking the progress of the COVID-19 against the backdrop of increasing efforts by the country to re-open the economy, albeit at a gradual pace. On the supportive side of the dollar remains its status of “global reserve currency”, store of value and the investors’ preference when comes to seek refuge amidst financial stress. Following the FOMC event, the Fed is expected to stay on the loose side of the monetary policy stance, at least until the coronavirus crisis abates.

US Dollar Index relevant levels

At the moment, the index is gaining 0.09% at 99.59 and a break above 100.49 (78.6% Fibo of the 2017-2018 drop) would aim for 100.93 (weekly/monthly high Apr.6) and finally 101.34 (monthly high Apr.10 2017). On the other hand, the next support lines up at 99.45 (weekly low Apr.28) followed by 99.31 (55-day SMA) and then 98.82 (monthly low Apr.15).