- DXY remains on the defensive and approaches 92.40.
- Markets’ attention remains on the pandemic vs. economic recovery.
- US Retail Sales, Industrial Production, Fedspeak next of note.
The greenback, when measured by the US Dollar Index (DXY), extends the downside momentum and drops to the 92.50/45 band on turnaround Tuesday.
US Dollar Index focused on the pandemic, data
The index recedes for the fourth consecutive session so far in the first half of the week amidst rising concerns over the relentless advance of the coronavirus pandemic in the US.
This fact eclipses the optimism regarding a potential vaccine (following recent news from Pfizer Inc. (NYSE: PFE) and Moderna Inc. (NASDAQ: MRNA) and keeps the dollar under persistent downside pressure.
Interesting day in the US data universe, where Retail Sales will take centre stage seconded by Industrial/Manufacturing Production, Capacity Utilization, Business Inventories, TIC Flows and the NAHB Index.
In addition, Atlanta Fed R.Bostic (2021 voter, centrist), San Francisco Fed M.Daly (2021 voter, centrist) and NY Fed J.Williams (permanent voter, centrist) are all due to speak.
What to look for around USD
DXY stays offered and leaves the door open to extra downside in the near-term. In the meantime, the dollar remains focused on the post-elections scenario and a the prospects of the US economy under the Biden administration. 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 a potential serious upside in the dollar.
US Dollar Index relevant levels
At the moment, the index is losing 0.09% at 92.56 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 93.20 (weekly high Nov.11) would open the door to 93.76 (100-day SMA) and finally 94.30 (monthly high Nov.4).
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