Dollar Looks Steady Even As Stocks Rebound

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Global equity markets enjoy recovery ahead of the weekend as the selling pressure surrounding riskier assets has abated following a major slump witnessed earlier in the week. Most equities are now regaining some ground as dip buyers reemerged after a sell-off. 

Bucking the trend, shares of Twitter lost over 20% in pre-market trading before rebounding somewhat. Twitter stocks plunged amid a report that Elon Musk has put his bid to acquire the company on hold pending details supporting the calculation that “spam/fake accounts do indeed represent less than 5% of users”. 

Despite the overall relatively upbeat tone in the financial markets, the safe-haven dollar refrains from a pronounced bearish correction, clinging to the upper end of the extended trading range after yesterday's rally towards fresh twenty-year highs. USD bulls were deterred by the 105.00 mark that now represents the immediate upside target for the buck. On Friday, the USD index oscillates around the flat-line, struggling for near-term direction.

It looks like the greenback would resume the ascent after a pause and could slip to lower levels in order to attract renewed demand. The risk-on tone doesn’t look sustained, with geopolitical and economic risks persisting, suggesting stocks across the globe will continue to trend lower both in the short and medium-term. This in turn should help the US currency extend the historic rally, especially as the Fed stays committed to its hawkish approach towards tightening. 

In the immediate term, the USD index could hold above 104.00, targeting 105.00. In a wider picture, the next major barrier around 107.30 will come into the market focus if the buying pressure continues to persist.