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  • DXY extends the downside to the vicinity of the 93.00 mark.
  • The index lost momentum near 93.70 on Wednesday.
  • Initial Claims, Producer Prices next of relevance in the US docket.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, extends the leg lower and tests the boundaries of the 93.00 mark on Thursday.

US Dollar Index now looks to data

After stalling in the 93.65/70 band on Wednesday, the index embarked on a correction lower that has so far met contention in the area just above 93.00 the figure in the second half of the week.

The multi-session recovery in the dollar appears to have met a tough resistance around 93.70, or monthly peaks, after comments from ECB officials re-ignited the appetite for riskier assets on Wednesday.

Later in the session, the US docket includes the usual publication of weekly Claims as well as Producer Prices for the month of August. Other than that, investors will also be closely following the ECB monetary policy meeting, where consensus has practically ruled out any modification of the benchmark rates.

What to look for around USD

The rally in the dollar failed near 93.70 earlier in the week, exposing the index to the resumption of the bearish trend. The ongoing recovery from 2020 lows near 91.70, while strong, is still considered as corrective only amidst the broad bearish stance surrounding the dollar. Supporting this view is located of a (more) dovish Fed, the unremitting progress of the coronavirus pandemic and political uncertainty ahead of the November elections. On the supportive side of the buck emerge occasional bouts of US-China tensions and the resumption of the risk aversion among investors.

US Dollar Index relevant levels

At the moment, the index is losing 0.10% at 93.15 and faces the next support at 91.75 (2020 low Sep.1) seconded by 89.23 (monthly low April 2018) and then 88.94 (monthly low March 2018). On the other hand, a break above 93.66 (monthly high Sep.9) would open the door to 93.99 (monthly high Aug.3) and finally 94.20 (38.2% Fibo of the 2017-2018 drop).