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

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).