US Dollar Index struggles for direction around 93.40

DXY lacks clear direction and gyrates around 93.40.
Investors’ attention shifts to the final Trump-Biden debate.
Housing data, Fedspeak next of relevance in the US calendar.

Pablo Piovano FXStreet

The greenback, in terms of the US Dollar Index (DXY), trades within a tight range in the 93.40 area on turnaround Tuesday.

US Dollar Index looks to politics, pandemic

The index trades without a clear direction following the moderate pullback recorded at the beginning of the week.

In fact, hopes of a US stimulus deal fuelled the strong performance of the risk complex on Monday, relegating the dollar to the 93.20 region, or multi-day lows. However, rising cases of coronavirus across the world coupled with the implementation of fresh restriction measures in many countries plus uncertainty around extra US stimulus appear to have put a floor to occasional bouts of selling pressure in the dollar.

In the US docket, Housing Starts and Building Permits will be in the limelight and will shed further light on the morale around the US housing sector, particularly following Monday’s record high of the NAHB index for the month of October.

In addition, FOMC’s R.Quarles (permanent voter, centrist) and Chicago Fed C.Evans (2021 voter, centrist) are also due to speak.

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 0.01% at 93.41 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).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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