US Dollar Index looks depressed near 92.50 on risk-on trade

• DXY adds to Friday’s losses and drops to the 92.50 region.
• The European session starts the week in an upbeat mood.
• NY Empire State Index, Fedspeak next in the US calendar.

The greenback, in terms of the US Dollar Index (DXY) extends the leg lower to new multi-day lows in the 92.50/45 band on Monday.

US Dollar Index focused on risk trends, pandemic

The index is losing ground for the third consecutive session so far on Monday on the back of the continuation of the better tone in the risk complex.

In fact, European markets open the trading week on the positive side as investors keep gauging the probability that a coronavirus vaccine could be delivered sooner rather than later (by year-end, perhaps?), the resumption of the reflation trade and further optimism on the Biden’s presidency.

In the US data space, the NY Empire State manufacturing gauge is due later along with speeches by FOMC’s R.Clarida (permanent voter, dovish) and San Francisco Fed M.Daly (2022 voter, centrist).

 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 0.25% at 92.47 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 93.86 (100-day SMA) and finally 94.30 (monthly high Nov.4).