US Dollar Index recedes from tops, back below 94.00

DXY faces some selling pressure in the sub-94.00 area.
The risk complex regains buying interest on Friday.
PCE, Personal Income/Spending, U-Mich next of note.

Pablo Piovano FXStreet

The greenback, in terms of the US Dollar Index (DXY), loses some upside traction and retreats from Thursday’s new monthly peaks past the 94.00 mark ahead of the opening bell in Euroland on Friday.

US Dollar Index looks to risk trends, data

Following four consecutive sessions with gains, the index is now losing some momentum and returns to the sub-94.00 area after reaching tops near 94.10 on Thursday.

In fact, rising coronavirus concerns, fading hopes of extra stimulus in the US and better-than-expected results from the US calendar have been collaborating with the better sentiment surrounding the buck in past sessions.

In the US data sphere, inflation figures tracked by the PCE (the Fed’s preferred measure) will be in the limelight seconded by Personal Income/Spending for the month of September along with the final October’s Consumer Sentiment and the Chicago PMI.

What to look for around USD

The index managed to revisit the area above the key 94.00 mark on Thursday, reaching at the same time new monthly tops. The current recovery in the dollar comes in response to the impact of the COVID-19 pandemic on the global growth prospects as well as dying chances of a deal between Democrats and Republicans over a new stimulus bill. However, the stance on the dollar is predicted to deteriorate in case Joe Biden wins the November elections, while the “lower for longer” stance from the Federal Reserve also caps occasional bullish attempts.

US Dollar Index relevant levels

At the moment, the index is losing 0.07% at 93.86 and faces immediate contention 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). On the flip side, a break above 94.10 (monthly high Oct.29) would expose 94.20 (38.2% Fibo retracement of the 2017-2018 drop) and finally 94.74 (monthly high Sep.25).

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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