- 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).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory near 1.0650
EUR/USD clings to modest daily gains at around 1.0650 in the American session on Wednesday. The US Dollar struggles to gather strength amid a modest improvement seen in risk mood and helps the pair hold its ground.
GBP/USD stabilizes at around 1.2450 after UK inflation data
GBP/USD consolidates its daily gains near 1.2450 after recovering toward 1.2500 with the immediate reaction to stronger-than-expected inflation data from the UK. The renewed US Dollar weakness also helps the pair hold its ground.
Gold eases despite risk-off mood
Gold trades in a relatively tight range near $2,390 in the second half of the day on Wednesday. In the absence of high-tier data releases, investors keep a close eye on headlines surrounding the Iran-Israel conflict.
XRP tests $0.50 resistance after Ripple CLO clarifies that no pretrial conference took place with SEC
XRP is stuck below $0.50 resistance after failing to close above this level since Monday. Ripple CLO Stuart Alderoty said late Tuesday there was no pretrial conference since the SEC dropped charges against executives.
World economy: To cut or not to cut (simultaneously)?
US inflation March figure, again higher than expected, put an end to the scenario of a simultaneous first rate cut by the Fed, the ECB, and the BoE in June.