US Dollar Index struggles for direction around 93.30, looks to data

  • DXY bounces off recent lows and regains the 93.00 mark.
  • US politics and an extra stimulus package remain in centre stage.
  • Retail Sales, Industrial Production, flash U-Mich next on tap.

The greenback, in terms of the US Dollar Index (DXY), has managed to reclaim the key 93.00 mark and above at the end of the week, although a clear trend remains absent so far this week.

US Dollar Index looks to politics, risk, data

The index now alternates gains with losses around the 93.30/20 band at the end of the week, regaining some composure after Thursday’s lows in the sub-93.00 region.

Indeed, the dollar keeps looking to the US political scenario, where there are no hints of a probable resumption of talks between Democrats and Republicans regarding a new stimulus bill.

In the meantime, the broad risk appetite trends continue to dominate the headlines in the global markets, always against the persistent trade-off between the unremitting coronavirus pandemic (second wave already?) and the progress of the economic re-opening.

In the US data space, Retail Sales for the month of July are due seconded by Industrial/Manufacturing Production, Capacity Utilization and the preliminary print of the Consumer Sentiment tracked by the U-Mich index.

What to look for around USD

The index stays on the defensive after being rejected once again from the 94.00 region earlier in the week. Looking at the broader picture, investors remain bearish on the dollar against the usual backdrop of a dovish Fed, the unabated advance of the pandemic and somewhat diminishing momentum in the economic recovery, whereas persistent US-China effervescence appears on the supportive side of the greenback. On another front, the speculative community remained well into the negative territory for yet another week, supporting the view that a serious bearish trend could be shaping up around the dollar.

US Dollar Index relevant levels

At the moment, the index is gaining 0.11% at 93.35 and a break above 93.99 (weekly high Aug.3) would aim for 94.20 (38.2% Fibo of the 2017-2018 drop) and then 96.03 (50% Fibo of the 2017-2018 drop). On the other hand, the next support is located at 92.93 (weekly low Aug.13) followed by 92.52 (2020 low Aug.6) and finally 91.80 (monthly low May 18).

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