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  • DXY fades the recent strength and recedes to the sub-94.00 area.
  • Polls continue to favour a win by Democrat candidate Joe Biden.
  • Factory Orders, IBD/TIPP Index, API’s report next in the US calendar.

The US Dollar Index (DXY), which measures the greenback vs. a bundle of its competitors, trades on the defensive and returns to the area below the 94.00 mark on turnaround Tuesday.

US Dollar Index looks to elections

Following four consecutive daily advances, the index sheds some ground on Tuesday after failing to extend the moderate move up further north of the 94.30 area at the beginning of the week, area coincident with the 100-day SMA and a Fibo retracement (of the 2017-2018 drop).

In the meantime, all the attention remains on the US elections, with polls keep signalling Democrat candidate Joe Biden as the next POTUS. The greenback looks cautious, however, on the back of potential contested results in case of a Republican defeat.

 

 

In the US docket and apart from the elections, Factory Orders are due seconded by the IBD/TIPP Index and the weekly report on crude oil supplies by the API.

What to look for around USD

The index recedes to the sub-94.00 area amidst rising cautiousness amongst investors and a probable win by Joe Biden at the Tuesday’s presidential elections. The recent recovery in the dollar stayed well supported by pandemic fears and escalating uncertainty ahead of the November 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 Biden wins. 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 retreating 0.28% at 93.87 and faces immediate contention at 93.33 (55-day SMA) followed by 92.47 (monthly low Oct.21) and then 91.92 (23.6% Fibo of the 2017-2018 drop). On the other hand, 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 96.58 (200-day SMA).