The US dollar index (DXY) rose for the third consecutive day as investors fled to its safety as the number of coronavirus infections rose in key countries. The DXY index rose by 0.30% to $92.86, which was the highest level since April 5.
DXY rises amid a rush to safety
The US dollar index is one of the best measures of the performance of the greenback. The index tracks the currency’s performance against a basket of other currencies like the euro, sterling, Canadian dollar, and Japanese yen. Today, the index rose as the US dollar rose by 1.30% against the Canadian dollar and 0.38% against the sterling, It also rose by 0.30% and 0.25% against the Japanese yen and euro, respectively.
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This price action was mostly because of the rising risks of the Delta virus that is causing havoc globally. Earlier today, New South Wales announced that it will intensify its lockdown as Victoria announced new restrictions. In a statement, a French government minister said that the country will likely return curfews in Paris.
Meanwhile, Thailand reported the highest number of cases. In the UK, the government announced its plans to ease lockdowns even as a leading scientist warned that the number of daily cases would surge to more than 200k per day. Boris Johnson is also in quarantine after he came into contact with Sajid Javid, the health minister who has been diagnosed with the disease.
The DXY performance also coincided with a major drop in global equities. In Europe, the DAX, CAC 40, and FTSE 100 indices declined by more than 1.50%. The Stoxx 50 index declined to the lowest level in seven weeks. Similarly, the Dow Jones, S&P 500, and Nasdaq 100 indices declined by more than 0.50% in the US.
US dollar index forecast
The 1D chart shows that the dollar index has been in a steady upward trend. Along the way, it has formed a small ascending channel that is shown in blue. It has moved along the upper side of the channel and the 25-day and 15-day moving averages. It is still below the important resistance level at $93.45 while the Relative Strength Index (RSI) is hovering slightly below the overbought level. Therefore, the index will likely break out higher as investors target the key level at $93.45.
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