- DXY loses upside traction and recedes to the 90.70 area.
- Risk-on sentiment appears to have regained the upper hand.
- Mortgage Applications, Wholesale Inventories, JOLTs report next on tap.
The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main competitors, faces some selling pressure and retreats to the 90.70 area, or 2-day lows.
US Dollar Index looks side-lined below 91.00
The index loses ground for the first time following two consecutive daily pullbacks, all amidst a mild recovery attempt and with the upside so far limited around the 91.30 zone.
The better note in the risk complex continues to weigh on the buck for the time being, always underpinned by the probability of extra US fiscal stimulus in the near-term, global reflation hopes and a potential Brexit deal.
Later in the US calendar, Mortgage Applications by MBA are due in first turn seconded by Wholesale Inventories, JOLTs Job Openings and the weekly report on US crude oil inventories by the EIA.
What to look for around USD
The dollar’s upside momentum loses vigour and drags the index back to the sub-91.00 mark on Wednesday on the back of the improved mood in the risk-associated universe. In fact, the outlook for the greenback remains immersed into the bearish side amidst rising probability of extra monetary/fiscal stimulus in the US economy, the “lower for longer” stance from the Federal Reserve and prospects of a strong economic recovery.
US Dollar Index relevant level
At the moment, the index is retreating 0.19% at 90.79 and faces the next support at 90.47 (2020 low Dec.4) followed by 89.22 (monthly low Apr. 2018) and then 88.94 (monthly low March 2018). On the upside, a breakout of 91.23 (weekly high Dec.7) would open the door to 91.92 (23.6% Fibo of the 2017-2018 drop) and finally 92.80 (weekly high Nov.23).
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