US Dollar Index extends the downside to 93.60 ahead of data

• DXY drops further and visits new lows in the 93.60 region.
• Markets remain optimistic on a probable stimulus bill.
• Initial Claims, ISM Manufacturing net of relevance in the docket.

The US Dollar Index (DXY) loses the grip further and drops to fresh multi-day lows in the proximity of the 93.60 level in the second half of the week.

US Dollar Index now looks to data, stimulus bill

The index fades further last week’s rebound to the 94.70/75 band and now trades in fresh multi-day lows near 93.60.

In fact, the better tone in the risk complex has been reinforced by fresh hopes that US policymakers could pass a new stimulus bill in the next hours, putting the buck under further downside pressure.

Later in the session and in the US data sphere, the Challenger Job Cuts is due in the first turn seconded by inflation figures tracked by the PCE, weekly Initial Claims, Personal Income/Spending, final Markit’s PMI and the always relevant ISM Manufacturing.

What to look for around USD

The index started the week on a soft note and extends the leg lower to the sub-94.00 level towards the end of the trading week. It seems the dollar met an important hurdle at the 94.70 region, where coincide a 6-month resistance line. 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 retreating 0.14% at 93.67 and faces the next contention at 93.46 (55-day SMA) followed by 92.70 (weekly low Sep.10) and then 91.92 (23.6% Fibo of the 2017-2018 drop). On the other hand, a break above 94.74 (monthly high Sep.25) would open the door to 95.29 (100-day SMA) and finally 96.03 (50% Fibo of the 2017-2018 drop).