US Dollar Index looks for direction near 93.50, focus on Powell
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US Dollar Index looks for direction near 93.50, focus on Powell

  • DXY seems to have met support near the 55-day SMA.
  • Investors’ interest keeps gyrating around the stimulus package.
  • US Balance of Trade, JOLTs Job Openings, Fedspeak next of relevance.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main rivals, looks for direction in the mid-93.00s on turnaround Tuesday.

US Dollar Index looks to data, politics

Following Monday’s sell-off to the 93.30 region, the index now manages to at least stop the downside and attempt some recovery on the back of so far mixed risk appetite trends.

In the meantime, market chatter keeps orbiting around the resumption of discussions in the US political scenario regarding another stimulus package, while uncertainty persists on the political arena in light of President Trump’s health and the runup to the November elections.

In the docket, JOLTs Job Openings are due seconded by August’s Balance of Trade results. The focus of attention, however, will be on the (virtual) speech by Chief Powell on Economic Outlook at the National Association of Business Economics (NABE) Annual Meeting. In addition, Philly Fed P.Harker (voter, hawkish) will also speak.

What to look for around USD

The index stays under pressure and is looking to rebound from Monday’s lows in the vicinity of 93.30. 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 gaining 0.08% at 93.52 and a break above 94.20 (38.2% Fibo retracement of the 2017-2018 drop) would aim for 94.74 (monthly high Sep.25) and finally 95.10 (100-day SMA). On the other hand, the next contention is located at 93.34 (monthly low Oct.5) followed by 92.70 (weekly low Sep.10) and then 91.92 (23.6% Fibo of the 2017-2018 drop).

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