- DXY moves higher and surpasses the 94.00 mark on Monday.
- Global focus stays on the upcoming presidential elections on Tuesday.
- ISM Manufacturing will be the salient event later in the NA session.
The greenback, when tracked by the US Dollar Index (DXY), remains firm and advances further north of the 94.00 mark so far on Monday.
US Dollar Index looks to data, elections
The index moves further north of the 94.00 mark at the beginning of the week as the risk aversion tightens its grip in the global markets. DXY thus managed to extend the move up to the 94.20/30 band, where coincide the 100-day SMA and a Fibo retracement of the 2017-2018 sell-off.
Indeed, the unremitting advance of the coronavirus pandemic coupled with the re-implementations of tighter restrictions in many countries across Europe continue to weigh on the global economic growth prospects and therefore underpins the ongoing bias favouring the dollar.
In addition, cautiousness and uncertainty continue to grow bigger by the hour as we get closer to the US presidential elections due on Tuesday. Despite polls favour a win by Democrat candidate Joe Biden, it is well worth remembering the pre-elections scenario between H.Clinton and D.Trump 4 years ago. Collaborating with the current strength in the dollar appears the persistent probability of contested elections.
Later in the US docket, October’s ISM Manufacturing will take centre stage seconded by final Markit’s manufacturing PMI.
What to look for around USD
The index manages to regain the area above the key 94.00 mark on Monday amidst the continuation of the risk-off mood amongst market participants. The current recovery in the dollar remains well supported by pandemic fears and escalating uncertainty ahead of the November 3 elections. In addition, market chatter regarding extra fiscal stimulus appears relegated until at least past the elections. In the meantime, the greenback is forecasted to stay under the microscope, as consensus among analysts predict a deterioration in the outlook on the buck in case Joe Biden becomes the next POTUS. Another risk event emerges later in the week with the FOMC monetary policy meeting, this time on Thursday.
US Dollar Index relevant levels
At the moment, the index is gaining 0.38% at 94.23 and a breakout of 94.74 (monthly high Sep.25) would open the door to 96.03 (50% Fibo of the 2017-2018 drop) and finally 96.60 (200-day SMA). On the flip side, immediate contention is located at 93.30 (55-day SMA) followed by 92.47 (monthly low Oct.21) and then 91.92 (23.6% Fibo of the 2017-2018 drop).
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