US Dollar Index comes under further pressure near 92.40 ahead of NFP

DXY sheds further ground and approaches 92.40.
Biden continues to lead the race to the White House.
Nonfarm Payrolls will take centre stage later in the session.

Pablo Piovano FXStreet

The greenback, in terms of the US Dollar Index (DXY), comes under extra downside pressure and navigates the area of 2-month lows near 92.40.

US Dollar Index focused on Payrolls, elections

The index remains well on the defensive so far this week and posts losses for the fourth consecutive session on Friday against the backdrop of persistent improvement in the risk complex.

In fact, the upbeat sentiment surrounding the riskier assets remain underpinned by increasing bets that Joe Biden could be the next US President despite there still are six states counting votes, among them key ones like Georgia and Pennsylvania.

In addition, while bets of a Biden presidency remain on the rise, so is the likeliness that incumbent President Trump could contest the eventual results, bringing in continuous uncertainty in the political scenario.

On another front, there was no news from the FOMC meeting on Thursday. In fact, and matching consensus, the Committee left the FFTR unchanged as well as the Average Inflation Targeting (AIT) and its commitment to keep rates at current low levels for a prolonged period. However, the statement did sound a tad downbeat after the Fed noted that in spite of the recovery, the economic activity and employment still remain below pre-covid crisis levels.

In the US data space, the October’s Nonfarm Payrolls will take centre stage later in the NA session seconded in relevance by September’s Wholesale Inventories and Consumer Credit Change.

What to look for around USD

The index tumbles further and navigates 2-month lows around 92.40 amidst increasing improvement in the risk-associated universe. In the meantime, rising probability of a Biden presidency keeps weighing on the dollar, although prospects of a “blue wave” looks largely diminished by now. On the more macro view, the impact of the second wave of the pandemic on the global economy could favour the occasional re-emergence of the risk aversion and therefore lend some support to the buck. No news from the Fed leaves the “lower for longer” stance unaltered, while very near-term fireworks remain on the table in light of the release of October’s Payrolls.

US Dollar Index relevant levels

At the moment, the index is losing 0.02% at 92.51 and faces immediate contention at 92.45 (monthly low Nov.6) followed by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018). On the other hand, a breakout of 94.08 (100-day SMA) would open the door to 94.30 (monthly high Nov.3) and finally 94.74 (monthly high Sep.25).

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.

GBP/USD clings to gains near 1.3400

GBP/USD retreats after reaching a three-week high above 1.3430, challenging the 1.3400 yardstick on Thursday. Although easing political uncertainty in the UK helps the quid limit its downside, escalating tensions in the Middle East support the Greenback, keeping Cable under scrutiny.

EUR/USD faces resistance around 1.1450

EUR/USD keeps the bid bias although it seems to have met a tough hurdle around 1.1450 on Thursday. The pair’s advance follows the bearish tone in the US Dollar despite escalating tensions in the Middle East and a broad-based cautious stance from market participants.

Gold flirts with two-day highs, approaches $4,130

Gold stages a modest rebound on Thursday, setting aside a three-day losing streak and managing to surpass the $4,100 mark per troy ounce. However, steady geopolitical tensions have revived concerns over persistently high global inflation, reinforcing expectations of higher rates across the board and somewhat curtailing the yellow metal’s upside potential.

Bitcoin stalls as mixed ETF flows, renewed US-Iran tensions cap upside

Bitcoin trades at $63,000 on Thursday, recovering slightly after facing rejection near $64,000. Renewed geopolitical uncertainty has dampened risk appetite, limiting BTC upside potential.

Japan may be changing its Yen strategy, but markets don’t look scared

Japan may be changing its intervention playbook, but that might not be enough to rescue the battered Yen. With USD/JPY hovering at four-decade highs, the currency’s weakness is being driven less by speculative pressure and more by a powerful structural force: the wide US-Japan rate gap.

Bye, forward guidance: How to trade when central banks choose silence

Central banks have spent years telling markets what might come next. Now, traders face the possibility that they say a lot less. From the Federal Reserve to the European Central Bank and the Bank of England, policymakers are pushing back against forward guidance.