US Dollar Index looks firmer and approaches 93.00, looks to the debate


  • DXY pushes higher and trades closer to the 93.00 yardstick.
  • Stalled stimulus talks give renewed oxygen to the greenback.
  • US Initial Claims rose below the 800K mark for the first time.

The US Dollar Index (DXY), which measures the buck vs. a bundle of its main rivals, keeps the upbeat mood unchanged and trades at shouting distance from the 93.00 mark.

US Dollar Index regains traction near 93.00

After testing fresh multi-week lows in the mid-92.00s on Wednesday, the index has managed to regain composure and is now flirting with the key barrier in the 93.00 neighbourhood.

Negotiations around extra stimulus have stalled in past hours and this gave the greenback enough reason to reclaim ground lost and the risk aversion the possibility to return to the markets. On the latter, cautiousness keeps growing ahead of the final presidential debate between President Trump and Democrat candidate Joe Biden.

Supporting the dollar, the weekly report on the US labour market showed Initial Claims rose by 787K WoW during last week, the first sub-800K reading since the start of the pandemic back in late March.

 

Later in the calendar comes in the September’s Existing Home Sales ahead of the speech by Richmond Fed Thomas Barkin (2021 voter, centrist).

What to look for around USD

The index remains well under pressure, particularly after breaking below the 93.00 mark in past hours and recording new multi-week lows on Wednesday. The move lower came in tandem with increasing hopes of extra stimulus, although this view has lost some vigour lately. In the meantime, and also weighing on the buck, bets of a “blue wave” win at the presidential elections next month remain on the rise. The fragile view on the dollar is also reinforced by the “lower for longer” stance from the Federal Reserve.

US Dollar Index relevant levels

At the moment, the index is gaining 0.25% at 92.85 and a break above 93.90 (weekly high Oct.15) would expose 94.20 (38.2% Fibo retracement of the 2017-2018 drop) and finally 94.74 (monthly high Sep.25). On the other hand, immediate contention is located at 92.47 (monthly low Oct.21) followed by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018).

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