US Dollar Index remains bid above 94.00, Fed’s Powell, data in sight

The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main competitors, remains firm and extends the upside beyond the 94.00 barrier.

US Dollar Index now looks to Powell

The moderate rebound in the index is extending for the fourth session in a row on Wednesday, always with the risk-off sentiment dominating the traders’ mood. In addition, recent Fed-speakers have hinted at the idea that the Fed could hike rates before inflation hits the Fed’s goal.

In the US data space, Markit’s flash manufacturing PMI came in at 53.5 for the current month, while the advanced services PMI receded a tad to 54.6. Earlier in the session, MBA’s Mortgage Applications rose 6.8% WoW and the House Price Index increased 1.0% MoM in July and 6.5% from a year earlier.

Later in the NA session, Fed Chief Jerome Powell is expected to testify before the House of Representatives on the Fed’s response to the coronavirus pandemic.

What to look for around USD

The dollar keeps the bid bias unchanged in the first half of the week and extends the rally further north of the 94.00 barrier. The ongoing bullish move in DXY is (still) seen as temporary, however, as the underlying sentiment towards the greenback remains on the negative side. This view is reinforced by the “lower for longer” stance from the Federal Reserve, the ongoing recovery in the global economy, the negative position in the speculative community and political uncertainty ahead of the November elections.

US Dollar Index relevant levels

At the moment, the index is gaining 0.13% at 94.09 and a break above 94.25 (monthly high Sep.23) would open the door to 95.64 (100-day SMA) and finally 96.03 (50% 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).