US Dollar Index under pressure, challenges 93.00 ahead of FOMC

DXY fades Tuesday’s small pullback and returns to the sub-93.00 area.
Retail Sales, the NAHB index, Business Inventories are all due later.
The FOMC will take centre stage later in the NA session.

Pablo Piovano FXStreet

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, remains under pressure and returns to the area below the 93.00 mark on Wednesday.

US Dollar Index focused on FOMC

The index has resumed the downside on Wednesday, leaving behind Tuesday’s small uptick and returning to the sub-93.00 region on the back of the persistent improvement in the risk-associated space.

Later in the US docket, all the attention will be on the Retail Sales for the month of August seconded by the NAHB index, MBA’s weekly Mortgage Applications, Business Inventories and the usual report on US crude oil stockpiles by the EIA.

Closing the session, the Federal Reserve is expected to keep rates unchanged while the freshly announced Average Inflation Targeting (AIT) is expected to be on top of the agenda along with the revised economic projections.

What to look for around USD

The rally in the dollar failed near 93.70 in the middle of last week, exposing the index to the resumption of the bearish trend. Occasional bullish attempts, however, are still considered as corrective only amidst the broad bearish stance surrounding the dollar. Supporting this view emerge a more dovish Fed, the unremitting progress of the coronavirus pandemic and political uncertainty ahead of the November elections. On the supportive side of the buck emerge occasional bouts of US-China tensions and the resumption of the risk aversion among investors.

US Dollar Index relevant levels

At the moment, the index is losing 0.18% at 92.90 and faces the next support at 92.70 (weekly low Sep.10) seconded by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.75 (2020 low Sep.1). On the other hand, a break above 93.66 (monthly high Sep.9) would open the door to 93.99 (monthly high Aug.3) and finally 94.20 (38.2% 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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