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  • DXY trades on the defensive near 32-month lows.
  • Risk-on trades dominates the mood in the global markets.
  • US Payrolls, Factory Orders, Fedspeak next on the docket.

The greenback, in terms of the US Dollar Index (DXY), extends the downside and approaches recent lows in the mid-90.00s.

US Dollar Index now looks to data

The index loses ground for the fourth consecutive session at the end of the week and trades at shouting distance from recent 32-month lows in the 90.50 region.

As usual, vaccine hopes and the likeliness of further US monetary/fiscal stimulus under the Biden’s presidency continue to rule the sentiment among global investors and not only puts the buck under extra pressure but also opens the door to a deeper pullback in the near-term.

Moving forward, the November’s Nonfarm Payrolls will take centre stage later in the session along with Factory Orders, Balance of Trade figures and speeches by Chicago Fed C.Evans (2021 voter, centrist) and FOMC’s M.Bowman (permanent voter, centrist).

What to look for around USD

The bearish stance around the greenback remains firm and forced DXY to breach the key support at the 91.00 mark to record new lows around 90.50. The better mood in the risk galaxy remains bolstered by a clearer US political scenario in combination with auspicious vaccine news and improved 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 losing 0.04% at 90.67 and faces immediate contention at 90.50 (2020 low Dec.3) followed by 89.22 (monthly low Apr. 2018) and then 88.94 (monthly low March 2018). On the other hand, a breakout of 91.92 (23.6% Fibo of the 2017-2018 drop) would open the door to 92.80 (weekly high Nov.23) and finally 93.20 (weekly high Nov.11).