US Dollar Index remains under pressure around 91.70 ahead of Powell, ISM

  • DXY stays depressed well below the 92.00 mark.
  • Risk-on sentiment prevails among market participants.
  • Powell, ISM Manufacturing next in the US calendar.

The greenback, when tracked by the US Dollar Index (DXY), remains under pressure below the key 92.00 mark on turnaround Tuesday.

US Dollar Index: Outlook still looks fragile

The downbeat momentum surrounding the index remains well and sound for yet another session in the first half of the week.

Indeed, DXY navigates a downward path along the 8-month support line in the 91.80/70 band, always under pressure in a context dominated by the investors’ appetite for the risk-associated universe.

The bearish view on the dollar stays underpinned by rising hopes of the development and distribution of an efficient coronavirus vaccine, optimism on extra US fiscal/monetary stimulus in the relatively short-term and prospects of a strong rebound in the global economy.

Later in the NA session, the ISM Manufacturing will take centre stage along with the testimony by Fed’s J.Powell before the Senate on “Coronavirus Aid, Relief, and Economic Security Act”.

In addition, FOMC’s L.Brainard (permanent voter, dovish), San Francisco Fed M.Daly (2021 voter, centrist) and Chicago Fed C.Evans (2021 voter, centrist) are all due to speak later in the session.

What to look for around USD

The bearish stance does not abandon the dollar and dragged DXY to new yearly lows around 91.50 at the beginning of the week. The better mood in the risk complex remains bolstered by a clearer US political scenario in combination with auspicious vaccine news and better growth prospects. Furthermore, hopes of extra fiscal stimulus have re-emerged and along with the “lower for longer” stance from the Federal Reserve is seen keeping the buck under extra pressure for the time being.

US Dollar Index relevant levels

At the moment, the index is retreating 0.15% at 91.72 and faces the next support at 91.50 (2020 low November 30) followed by 89.22 (monthly low Apr. 2018) and then 88.94 (monthly low March 2018). On the other hand, a breakout of 93.20 (weekly high Nov.11) would open the door to 93.29 (100-day SMA) and finally 94.30 (monthly high Nov.4).

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