US Dollar Index met resistance around 93.60, looks to data

  • DXY recedes from earlier tops in the 93.60 region.
  • The FOMC kept rates on hold as expected on Wednesday.
  • US Initial Claims, Philly Fed index, housing data next of note in the docket.

The greenback, when tracked by the US Dollar Index (DXY), has regained momentum above the 93.00 mark on Thursday.

US Dollar Index boosted by Fed, now looks to data

The index managed to climb as high as the 93.60 region earlier on Thursday, leaving behind two consecutive sessions with inconclusive price action.

In fact, the dollar regained buying interest after the Federal Reserve matched the broad consensus and left its monetary conditions unchanged at its meeting on Wednesday. The Committee, however, gave a quite upbeat assessment of the US economic recovery, although it expects rates to remain at current levels through at least 2023.

The Fed now sees the economy contracting 3.7% this year and returning to pre-pandemic levels at some point by the end of the next year. Furthermore, employment is seen around 4% and inflation is also predicted to reach the 2% target, both by end of 2023.

In the US data space, the focus of attention will be as usual on the performance of weekly Claims seconded by the Philly Fed index, Housing Starts and Building Permits.

What to look for around USD

The dollar regained the smile following the FOMC event on Wednesday and reached the 93.60 level earlier on Thursday, where some relevant barrier appears to have emerged. The current recovery in DXY, however, is still considered as corrective only amidst the broad bearish stance surrounding the dollar, the “lower for longer” stance from the Federal Reserve, the unremitting advance of the coronavirus pandemic and political uncertainty ahead of the November elections.

US Dollar Index relevant levels

At the moment, the index is gaining 0.25% at 93.34 and 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). On the other hand, the next support emerges 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).

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