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  • DXY remains on the defensive near the 92.00 mark.
  • Risk appetite puts the dollar under extra pressure.
  • FOMC Minutes, PCE, Initial Claims next of note in the docket.

The greenback accelerates the downside and drags the US Dollar Index (DXY) to the vicinity of the 92.00 mark on Wednesday.

US Dollar Index weaker on risk-on trade

The index remains under pressure and flirts with the 8-month support line against the backdrop of the solid improvement in the risk complex.

In fact, the dollar continues to suffer the optimism stemming from potential coronavirus vaccines in the medium-term, while the formal start of the transition process to the Biden’s administration also collaborated with the upbeat sentiment.

It will be a very interesting session in the US calendar ahead of Thursday’s Thanksgiving Day holiday. Indeed, Initial Claims, inflation figures tracked by the PCE and the November’s final U-Mich index will all take centre stage ahead of the FOMC Minutes due later in the session.

In addition, MBA’s Mortgage Applications are due followed by Durable Goods Orders, Q3 GDP Growth Rate, advanced Trade Balance results, New Home Sales and Personal Income/Spending.

What to look for around USD

DXY remains on the defensive and does not rule out a visit to the 2020 lows near 91.70 in the short-term horizon. The better mood in the risk-complex was bolstered further by a clearer US political scenario in combination with auspicious vaccine news and better growth prospects. Furthermore, hopes of extra fiscal stimulus have re-emerged and along with the “lower for longer” stance from the Federal Reserve is seen keeping the buck under extra pressure for the time being.

US Dollar Index relevant levels

At the moment, the index is retreating 0.12% at 92.11 and faces the next support at 92.01 (monthly low Nov.23) followed by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018). On the other hand, a breakout of 93.20 (weekly high Nov.11) would open the door to 93.48 (100-day SMA) and finally 94.30 (monthly high Nov.4).

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