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  • DXY looks to reverse the recent downside and trades around 94.00.
  • No reaction in the FX space following the Trump-Biden debate.
  • The ADP report will be in the limelight later in the session.

The US Dollar Index (DXY), which tracks the buck vs. a bundle of its main competitors, is looking for direction in the 94.00 neighbourhood on Wednesday.

US Dollar Index focused on data

The index is attempting a mild rebound early in the European session following two consecutive daily pullbacks and after failing to extend the recovery at the 6-month resistance line, today near 94.50.

The US dollar remained apathetic after a chaotic first presidential debate between President Trump and Democrat candidate Joe Biden on Tuesday. The debate, per se, lack relevant content for investors/voters and showed nothing new to market participants. In the wake of the debate, Joe Biden’s gap in the race to the White House appears unchanged according to many polls.

In the meantime, there are no changes in the more macro scenario, where the second wave of the coronavirus pandemic continues to weigh on investors’ confidence on a strong economic recovery, as many countries have stepped up restrictions and lockdowns on affected areas.

In the US data space, the focus of attention will be on the ADP report, seconded by weekly MBA’s Mortgage Applications, Pending Home Sales and another revision of the Q2 GDP. In addition, Minneapolis Fed Neel Kashkari (voter, dovish) will speak at the event “Conversations with the Fed: Urgent problems facing communities during COVID-19”.

What to look for around USD

The index started the week on a weak note, although it manages well to keep the trade just above the 94.00 yardstick for the time being. 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 advancing 0.03% at 93.91 and a break above 94.74 (monthly high Sep.25) would open the door to 95.36 (100-day SMA) and finally 96.03 (50% Fibo of the 2017-2018 drop). On the other hand, the next support is located at 93.51 (55-day SMA) followed by 92.70 (weekly low Sep.10) and then 91.92 (23.6% Fibo of the 2017-2018 drop).