US Dollar Index regains composure, still below 93.00 ahead of data

The greenback, when gauged by the US Dollar Index (DXY), recovers the smile and advances to the 92.70 region in the second half of the week.

US Dollar Index looks to politics, data

The index reverses four consecutive sessions with losses on Thursday and looks to extend the rebound from Wednesday’s multi-week lows in the 92.50/45 band.

The dollar found some buying interest after discussions around another stimulus bill remain stalled despite recent efforts from House Speaker N.Pelosi and Treasury Secretary S.Mnuchin to find some common ground. The delivery of an extra stimulus package therefore looks increasingly unlikely for the time being, at least until the presidential elections on November 3.

Moving to the US data space, the usual Initial Claims should shed further light on how the labour market fared during last week. Additional data will see September’s Existing Home Sales while the speech by Richmond Fed Thomas Barkin (2021 voter, centrist) is the only event in the Fedspeak space.

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 0.06% at 92.67 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 other hand, 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).