US Dollar Index stays depressed near 89.70 ahead of data
|- The dollar adds to Monday’s losses near 89.70.
- Focus turns to US politics and the vote in Georgia.
- The ISM Manufacturing will take centre stage in the US docket.
The US Dollar Index (DXY), which gauges the buck vs. a bundle of its main rivals, keeps the negative mood unchanged in the first half of the week and always below the 90.00 mark.
US Dollar Index looks to politics, data
The index extends the pessimism seen at the beginning of the week into turnaround Tuesday, although it managed to bounce off fresh lows in the 89.40 region recorded on Monday, levels last seen in April 2018.
The greenback regained some ground after bottoming out near 89.40 on Monday following a bout of risk-off sentiment mainly stemming from the increasing coronavirus cases and fresh concerns over mutations of the virus.
On the political front, investors will closely follow the vote count in Georgia, where the control of the US Senate is at stake. On this, Democrats need to win two seats to provoke a 50-50 seats split, in which case Vice President elect Kamala Harris will have the last deciding vote.
In the US data space, the ISM Manufacturing will be in the limelight followed by speeches by Chicago Fed C.Evans (voter, centrist) and New York Fed J.Williams (permanent voter, centrist) and the weekly report on US crude oil supplies by the API.
What to look for around USD
The index regains downside momentum at the start of the new year, always on the back of the broad-based upbeat mood in the risk-associated universe. In addition, the outlook for the greenback remains immersed into the bearish side amidst extra monetary/fiscal stimulus in the US economy, the “lower for longer” stance from the Federal Reserve and prospects of a strong recovery in the global economy.
US Dollar Index relevant levels
At the moment, the index is retreating 0.14% at 89.74 and faces the next support at 89.42 (2021 low Jan.4) followed by 89.22 (monthly low Apr. 2018) and then 88.94 (monthly low March 2018). On the upside, a breakout of 91.01 (weekly high Dec.21) would aim for 91.23 (weekly high Dec.7) and finally 91.92 (23.6% Fibo of the 2017-2018 drop).
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