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  • DXY fades the initial uptick to the 94.00 neighbourhood.
  • Markets react negatively after Trump tested positive for COVID-19.
  • Non-farm Payrolls take centre stage later in the NA session.

The greenback, when gauged by the US Dollar Index (DXY), fades the earlier move up to daily highs in the 94.00 region.

US Dollar Index looks to risk trends, data

The index struggles for direction at the end of the week following four consecutive daily pullbacks, always against the backdrop of the improved sentiment in the risk-associated universe.

In fact, market chatter regarding the likeliness of another US stimulus package has been sustaining the recent upbeat momentum in the riskier assets. However, US policymakers poured cold water over these expectations on Thursday after hinting at the idea that discussions remain stuck without direction.

In addition, news that President Trump tested positive for coronavirus after the presidential debate has also dented the mood around the buck.

Later in the session, the Non-farm Payrolls for the month of September will take centre stage seconded in relevance by the final print of the Consumer Sentiment, Factory Orders and the speech by Philly Fed Patrick Harker (voter, hawkish).

What to look for around USD

The index remains on the defensive so far this week, coming under selling pressure after recent 2-month tops near 94.70 (September 25). Occasional bullish attempts in DXY are (still) seen as temporary, however, 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 and over further monetary/fiscal stimulus.

US Dollar Index relevant levels

At the moment, the index is gaining 0.04% at 93.76 and a break above 94.74 (monthly high Sep.25) would open the door to 95.22 (100-day SMA) and finally 96.03 (50% Fibo of the 2017-2018 drop). On the other hand, the next contention is located at 93.56 (weekly low Oct.1) followed by 92.70 (weekly low Sep.10) and then 91.92 (23.6% Fibo of the 2017-2018 drop).