- DXY trades on a sour mood and tests the 92.70 region.
- Stimulus talks look stalled and unlikely to make any progress soon.
- Markit’s flash PMIs next of relevance in the US calendar.
The greenback is losing momentum and sheds ground from recent peaks beyond the key barrier at 93.00 the figure when gauged by the US Dollar Index (DXY).
US Dollar Index focused on politics, data
The index reverses two sessions in a row at the end of the week and returns to the area below the 93.00 yardstick as market participants now favour the risk complex following the opening bell in Euroland.
Nothing new emerged from the last Trump-Biden presidential debate late on Thursday, with polls still favouring a win of Democrat candidate. It is worth recalling that the so-called “blue wave” is predicted to negatively impact on the buck.
In the meantime, the greenback manages to get extra support after House Speaker N.Pelosi talked down the possibility that the stimulus bill could be delivered before the November elections.
Later in the US docket, the focus of attention will be on the release of the preliminary prints for the manufacturing and services PMIs for the current month tracked by Markit.
What to look for around USD
The index managed to leave behind the downside pressure observed at the beginning of the week and has reclaimed the 93.00 neighbourhood towards the end of the week. The current recovery came in tandem with shrinking hopes of extra stimulus in the short-term horizon at least. In the meantime, and also weighing on the buck, bets of a “blue wave” win at the presidential elections next month remain on the rise. The fragile view on the dollar is also reinforced by the “lower for longer” stance from the Federal Reserve.
US Dollar Index relevant levels
At the moment, the index is losing 0.22% at 92.72 and faces immediate contention at 92.47 (monthly low Oct.21) followed by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018). On the upside, a break above 93.90 (weekly high Oct.15) would expose 94.20 (38.2% Fibo retracement of the 2017-2018 drop) and finally 94.74 (monthly high Sep.25).
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