US Dollar Index eases from tops just below 94.00 ahead of data

  • DXY gives away some gains and hovers around 93.70.
  • Markets’ attention remains on US politics, second wave of COVID-19.
  • Retail Sales, U-Mich, Industrial Production next of note in the docket.

The greenback, when tracked by the US Dollar Index (DXY), trades slightly into the negative territory after failed to test the 94.00 barrier earlier in the session on Friday.

US Dollar Index now looks to data

The index faltered near the 94.00 mark earlier in the Asian trading hours and sparked a mild knee-jerk while global markets continue to find a clearer direction following the opening bell in the Old Continent.

In the meantime, US politics remains in the centre of the debate with less than 20 days to the presidential elections and with the deadlock around further stimulus still unresolved. In addition, the unremitting advance of the coronavirus pandemic threatens to undermine the global recovery and puts the risks complex under extra pressure.

Later in the US data space, Retail Sales for the month of September will be in the limelight seconded in relevance by Industrial/Manufacturing Production, Capacity Utilization, TIC Flows and the preliminary gauge of the Consumer Sentiment. In addition, New York Fed J.Williams (permanent voter, centrist) is due to speak.

What to look for around USD

The index stays so far supported by the 93.000 area against the backdrop of alternating risk appetite trends. Occasional bullish attempts, however, are seen as temporary, as the underlying sentiment towards the greenback remains cautious-to-bearish. This view is reinforced by the “lower for longer” stance from the Federal Reserve, hopes of a strong recovery in the global economy, the negative position in the speculative community and rising bets of a “blue wave” win at the November elections. Developments around another US stimulus package also collaborate with the vigilant stance around the buck.

US Dollar Index relevant levels

At the moment, the index is losing 0.03% at 93.75 and faces immediate contention at 93.01 (monthly low Oct.12) followed by 92.70 (weekly low Sep.10) and then 91.92 (23.6% Fibo of the 2017-2018 drop). On the other hand, a break above 94.20 (38.2% Fibo retracement of the 2017-2018 drop) would aim for 94.74 (monthly high Sep.25) and finally 96.03 (50% Fibo of the 2017-2018 drop).

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