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  • DXY picks up further downside momentum near 93.20.
  • The dollar suffers the improved mood in the risk complex.
  • US Producer Prices came in above expectations in July.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, is trading on the defensive and approaches the 93.00 mark on Tuesday.

US Dollar Index weaker on risk-on mood

The index came under pressure on Tuesday eroding the earlier advance to the 93.70 region, where some tough resistance appears to have emerged.

Indeed, market participants have shifted their attention to the risk complex once again, always sustained by positive news on the coronavirus front – this time Russia registered the first vaccine – and rising hopes that US lawmakers could clinch another stimulus package any time soon.

In the US data space, the NFIB Index slipped back a tad to 98.8 in July, down from June’s 100.6. Further data saw headline Producer Prices contracting 0.4% on a year to July and advancing 0.6% from a month earlier; Core prices rose 0.5% inter-month and 0.3% over the last twelve months.

What to look for around USD

The dollar managed to leave behind the area of +2-year lows near 92.50 in the second half of last week, managing to reclaim the area well above 93.00 afterwards. Occasional bullish attempts, however, appears to have run out of favour in the 94.00 region (August 3). Looking at the broader picture, investors keep the bearish stance on the dollar unchanged against the usual backdrop of a dovish Fed, the unabated advance of the pandemic and somewhat diminishing momentum in the economic recovery, while renewed US-China effervescence appears to have lent some oxygen to the currency as of late. On another front, the speculative community remained well into the negative territory for yet another week, supporting the view that a more serious bearish trend could be shaping up around the dollar.

US Dollar Index relevant levels

At the moment, the index is losing 0.38% at 93.26 and faces the next support at 92.52 (2020 low Aug.6) seconded by 91.80 (monthly low May 18) and finally 89.23 (monthly low April 2018). On the other hand, a break above 93.99 (weekly high Aug.3) would target 94.20 (38.2% Fibo of the 2017-2018 drop) en route to 96.03 (50% Fibo of the 2017-2018 drop).