- Daily gains in DXY run out of steam in the 93.10 region.
- Dollar resumes the downside following Wednesday’s rebound.
- Initial Claims, Philly Fed index next of relevance in the US calendar.
The greenback, when tracked by the US Dollar Index (DXY), is posting modest losses around the 93.00 mark following the opening bell in the Old Continent.
US Dollar Index looks to data
The index is now struggling for direction and keeps gyrating around the 93.00 neighbourhood following Wednesday’s decent rebound from recent fresh yearly lows.
The dollar gained extra pace on Wednesday following renewed concerns on the US-China trade front, while the political stalemate surrounding the debate of another stimulus package remains unsolved for the time being.
In addition, and following the publication of the FOMC minutes, the Committee said the ongoing coronavirus crisis is expected to weigh heavily on the economy, inflation and unemployment, therefore undermining the medium-term outlook for the US economy.
Later in the session, the focus of attention will be on the usual weekly Claims seconded by the manufacturing gauge from the Philly Fed.
What to look for around USD
The index remains on the defensive although it has managed to regain some composure and retake the 93.00 mark in past hours (from as low as 92.13 on Tuesday). In the meantime, and looking at the broader picture, investors remain bearish on the dollar against the usual backdrop of a dovish Fed, the unremitting progress of the coronavirus pandemic, political uncertainty and the massive stimulus package, whereas occasional bouts of US-China tensions could lend some temporary legs to the greenback. Supporting the negative stance on the dollar, the speculative community remained clearly biased towards the bearish side during the past week.
US Dollar Index relevant levels
At the moment, the index is up 0.07% at 93.06 and a break above 93.99 (weekly high Aug.3) would aim for 94.20 (38.2% Fibo of the 2017-2018 drop) and then 96.03 (50% Fibo of the 2017-2018 drop). On the downside, the next support lines up at 92.13 (2020 low Aug.18) seconded by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018).
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