US Dollar Index loses the grip and approaches 93.00

DXY adds to Friday’s losses and drops to the vicinity of 93.00.
Attention will be on the FOMC meeting later on Wednesday.
Industrial//Manufacturing Production next on tap on Tuesday.

Pablo Piovano FXStreet

The US Dollar Index (DXY), which gauges the greenback vs. its main competitors, has started the week on a negative note and trades closer to the key support at 93.00 the figure.

US Dollar Index focused on data, Fed

The index is down for the second session in a row on Monday, navigating just above the 93.00 mark in an environment slightly biased towards the risk-on sentiment.

In fact, the index is adding to Friday’s losses and is prolonging the correction lower after the recent USD-rally met important resistance in the proximity of 93.70 (September 9).

Nothing worth mentioning data wise in the US docket on Monday, whereas Tuesday’s calendar will include Industrial/Manufacturing Production, Capacity Utilization and the Empire State index, all ahead of the key FOMC event on Wednesday.

What to look for around USD

The rally in the dollar failed near 93.70 in the middle of last week, exposing the index to the resumption of the bearish trend. The recovery from 2020 lows near 91.70, while strong, is still considered as corrective only amidst the broad bearish stance surrounding the dollar. Supporting this view is located of a (more) dovish Fed, the unremitting progress of the coronavirus pandemic and political uncertainty ahead of the November elections. On the supportive side of the buck emerge occasional bouts of US-China tensions and the resumption of the risk aversion among investors.

US Dollar Index relevant levels

At the moment, the index is losing 0.15% at 93.13 and faces the next support 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). On the other hand, 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).

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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