Search ForexCrunch
  • DXY navigates around the 94.50 region on Monday.
  • Focus remains on the pandemic, economic recovery, politics.
  • Dallas Fed index, Fedspeak next on tap in the docket.

The greenback, in terms of the US Dollar Index (DXY), alternates gains with losses around the 94.50 region at the beginning of the week.

US Dollar Index looks to politics, data

The index is looking to extend the rally and keeps flirting with the 6-month resistance line in the 94.50/60 band at the beginning of the week. A breakout of this area should leave the dollar exposed to further gains in the short-term horizon.

Furthermore, risk appetite trends navigate without a clear direction on Monday, with most assets trading within a rangebound mood around last Friday’s closing levels.

In the US data space, the Dallas Fed manufacturing index is due later along with the speech by Cleveland Fed Loretta Mester (voter, hawkish). The main event, however, will be on the US monthly labour market report towards the end of the week.

Investors will also closely follow the first presidential debate between President Trump and Democrat nominee Joe Biden on Tuesday, all against the still uncertain US political scenario.

What to look for around USD

The dollar tries to keep the buying bias unchanged on Monday, although further gains need to leave behind the 94.50/60 band, where sits a key resistance line. The ongoing bullish move in DXY is (still) seen as temporary, however, as the underlying sentiment towards the greenback stays cautious-to-bearish. This view is reinforced by the “lower for longer” stance from the Federal Reserve, hopes of a strong recovery in the global economy, the negative position in the speculative community and political uncertainty ahead of the November elections and over further monetary/fiscal stimulus.

US Dollar Index relevant levels

At the moment, the index is retreating 0.09% at 94.50 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 flip side, a break above 94.74 (monthly high Sep.25) would open the door to 95.48 (100-day SMA) and finally 96.03 (50% Fibo of the 2017-2018 drop).