US Dollar Index climbs to daily highs near 93.30

DXY starts the week on a positive footing near the 93.30 region.
Chicago Fed index, Fedspeak coming up next in the docket.
Markets’ focus will be on Chief Powell’s testimonies later this week.

Pablo Piovano FXStreet

The US Dollar Index (DXY), which gauges the buck vs. a bundle of its main competitors, has reversed the initial pessimism and it now climbs to daily highs in the 93.30 region.

US Dollar Index looks to Powell, risk trends

The index is adding to Friday’s gains beyond 93.00 the figure, as market participants seem to favour the safe haven universe amidst the prevailing risk aversion mood at the beginning of the week.

Indeed, the selling sentiment among the riskier assets is sustaining the continuation of the recovery in the buck, which has the initial target at last week’s peaks in the 93.55/60 band (September 17).

Later in the day, the Chicago Fed National Activity Index will be the sole release seconded by the speech by FOMC’s L.Brainard (permanent voter, dovish). Moving forward, investors’ focus are expected to gyrate around the testimonies by Fed’s Powell on Tuesday, Wednesday and Thursday.

What to look for around USD

The dollar keeps the composure at the beginning of the week and looks to stabilize above the 93.00 yardstick. Occasional bullish attempts in DXY are seen as temporary, however, as the broad-based sentiment towards the greenback remains bearish. This view is reinforced by the “lower for longer” stance from the Federal Reserve, the unremitting advance of the coronavirus pandemic, the negative position in the speculative community and political uncertainty ahead of the November elections.

US Dollar Index relevant levels

At the moment, the index is gaining 0.30% at 93.28 and a break above 93.66 (monthly high Sep.9) would open the door to 93.99 (monthly high Aug.3) and finally 94.20 (38.2% Fibo of the 2017-2018 drop). On the other hand, the next support emerges at 92.70 (weekly low Sep.10) seconded by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.75 (2020 low Sep.1).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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