US Dollar Index pushes higher and approaches 94.00

The greenback, in terms of the US Dollar Index (DXY), picks up extra steam and manages to test the vicinity of the key barrier at 94.00 the figure on Thursday.

US Dollar Index firmer on risk aversion

The index climbs to multi-day highs near the 94.00 yardstick in the second half of the week, always on the back of the persistent bias towards the risk aversion in the global markets.

In fact, increasing fears of the impact on the global economy of the second wave of the coronavirus pandemic continue to lend momentum to the safe haven universe. This view is also reinforced by the deadlock surrounding another US fiscal stimulus bill.

The index, however, fails to extend the move further north after weekly Initial Claims rose by 898K, more than forecasted. Extra data saw the Philly Fed index improving to 32.3 for the current month and the NY Empire State index ticking lower to 10.50 for the same period.

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 gaining 0.43% at 93.80 and 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 94.70 (100-day SMA). On the downside, immediate contention lines up 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).