- DXY keeps trading with a downside bias on Tuesday.
- Appetite for riskier assets keeps weighing on the dollar.
- Housing Starts, Building Permits improve in September.
The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main competitors, remains depressed in the lower bound of the recent range near 93.15.
US Dollar Index stays focused on politics
DXY sheds further ground and challenges the 55-day SMA in the 93.30 region, recording at the same time new 5-day lows.
As usual in past days, investors’ bets on a final deal in the US political scenario that deliver another fiscal stimulus package stay on the rise and weigh further on the safe haven universe, motivating the index to struggle once again at the 6-month resistance line, today around 93.65.
In the US data space, the recovery in the housing sector stays firm after Housing Starts and Building Permits expanded by 1.415 million units and 1.553 million units, respectively, during September. These results add to Monday’s record high reading in the NAHB index for the current month (85).
Further out, FOMC’s R.Quarles (permanent voter, centrist) and Chicago Fed C.Evans (2021 voter, centrist) are also due to speak later in the session.
What to look for around USD
The index met solid contention in the 93.00 region so far this month. Occasional bullish attempts, however, are seen as temporary, as the underlying sentiment towards the greenback remains cautious. This view is reinforced by the “lower for longer” stance from the Federal Reserve, hopes of a strong recovery in the global economy and rising bets of a “blue wave” win at the presidential elections. Developments around another US stimulus package also collaborate with the vigilant stance around the buck.
US Dollar Index relevant levels
At the moment, the index is losing 0.24% at 93.20 and faces immediate contention at 93.01 (monthly low Oct.12) followed by 92.70 (weekly low Sep.10) and then 91.92 (23.6% Fibo of the 2017-2018 drop). On the other hand, a break above 94.20 (38.2% Fibo retracement of the 2017-2018 drop) would aim for 94.74 (monthly high Sep.25) and finally 96.03 (50% Fibo of the 2017-2018 drop).
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