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  • DXY gives away part of Monday’s gains and recedes to 92.60.
  • Markets’ attention gyrates around US politics and COVID-19 vaccine.
  • NFIB Index, IBD/TIPP Index, Fedspeak next in the calendar.

Following Monday’s strong gains, the US Dollar Index (DXY) now loses some upside momentum and returns to the 92.60 region.

US Dollar Index appears capped around 93.00

After bottoming out near 92.10 at the beginning of the week, the index managed to regain composure and closed the initial session well into the positive territory albeit unable to re-test and surpass the key barrier at 93.00 the figure.

In the meantime, the dollar continues to look to the US political scenario in the wake of the Biden win at the November 3 elections, while optimism remains high following Monday’s announcement by US pharmaceutical Pfizer (NYSE: PFE) regarding its auspicious results in the development of a coronavirus vaccine.

Later in the NA session, the NFIB Index and the IBD/TIPP Index will be the only releases in the docket. Additionally, FOMC’s permanent voters R.Quarles (centrist) and L.Brainard (dovish) are due to speak.

What to look for around USD

The index rebounds from recent lows in the proximity of the 92.00 neighbourhood, although gains look so far capped by the 93.00 zone. The dollar remains focused on the US post-elections scenario, where all the looks are upon (still) President Trump and his potential attempts to contest some results in several states. On the more macro view, the impact of the second wave of the pandemic on the global economy could favour the occasional re-emergence of the risk aversion and therefore lend some support to the buck, while extra progress regarding vaccines against the COVID-19 should support momentum in the risk complex. Further out, the “lower for longer” stance from the Federal Reserve is expected to keep limiting potential serious upside in DXY.

US Dollar Index relevant levels

At the moment, the index is losing 0.21% at 92.63 and faces immediate contention at 92.13 (monthly low Nov.9) followed by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018). On the other hand, a breakout of 92.96 (monthly high Nov.9) would open the door to 93.29 (55-day SMA) and finally 94.30 (monthly high Nov.4).