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  • DXY keeps the bid tone in place around 93.20/30.
  • Rumours of an extra stimulus package lose momentum.
  • US Core CPI rose 0.2% MoM and 1.7% YoY in September.

The US Dollar Index (DXY), which tracks the buck vs. a bundle of its main rivals, stays bid above the 93.00 mark so far in the first half of the week.

US Dollar Index unchanged post-US CPI

The index flirts with the 55-day SMA in the vicinity of 93.30 against the backdrop of a better mood in the safe haven universe on Tuesday.

In fact, the index picks up renewed upside pace after hopes of a COVID-19 vaccine somewhat faded after Johnson & Johnson (NYSE: JNJ) announced it will halt its study after a participant showed unexplained illness. The news hurt the sentiment surrounding the risk complex and gave fresh oxygen to the demand for the dollar.

In addition, uncertainty in the US political scenario is expected to remain well and sound after President Trump resumed its campaign after being diagnosed with COVID-19.

In the US data sphere, inflation figures measured by the CPI showed headline consumer prices rose 0.2% inter-month in September and 1.4% over the last twelve months. Prices stripping food and energy costs rose 0.2% MoM and 1.7% from a year earlier. additionally, the NFIB Index improved to 104.0 in September and the IBD/TIPP Index comes up later in the session.

What to look for around USD

The index stays supported by the 93.00 region so far this week. Occasional bullish attempts, however, are seen as temporary, as the underlying sentiment towards the greenback remains 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. The resumption of market chatter surrounding another stimulus package also puts the dollar under extra pressure.

US Dollar Index relevant levels

At the moment, the index is gaining 0.24% at 93.26 and a break above 94.20 (38.2% Fibo retracement of the 2017-2018 drop) would aim for 94.74 (monthly high Sep.25) and finally 94.80 (100-day SMA). On the downside, immediate contention lines up at 92.70 (weekly low Sep.10) followed by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018).