US Dollar Index looks rangebound near 93.40 ahead of data

  • DXY alternates gains with losses in in the 93.40 region.
  • Stimulus talks remain deadlocked amidst US political uncertainty.
  • Usual weekly Claims, Philly Fed index, Fedspeak next in the docket.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, remains side-lined around the 93.40 area in the second half of the week.

US Dollar Index now looks to data

The index keeps the choppy activity unchanged so far this week, always supported by the 93.00 neighbourhood and against the backdrop of persistent uncertainty in the US political scenario.

Indeed, DXY looks cautious amidst rising consensus of a Biden win at the November 3 elections, which is considered a bearish event for the buck.

Occasional retracements in the dollar appears limited, however, after US policymakers failed to unlock the negotiations surrounding another fiscal stimulus bill, particularly after President Trump’s proposal ($1.8 trillion bill) was deemed as insufficient by House Speaker Pelosi.

Moving forward and looking at the US calendar, attention is expected to be on the usual weekly Initial Claims along with the Philly Fed manufacturing gauge, the NY Empire State Index and Export/Import prices. Further out, FOMC’s R.Quarles (permanent voter, centrist) and Minneapolis Fed N.Kashkari (voter, dovish) are due to speak.

What to look for around USD

The index stays so far supported by the 93.000 area against the backdrop of alternating risk appetite trends. Occasional bullish attempts, however, are seen as temporary, 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 rising bets of a “blue wave” win at the November elections. Developments around another US stimulus package also collaborate with the vigilant stance around the buck.

US Dollar Index relevant levels

At the moment, the index is gaining 0.05% at 93.45 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 94.70 (100-day SMA). On the downside, immediate contention lines up at 93.01 (monthly low Oct.12) followed by 92.70 (weekly low Sep.10) and then 91.92 (23.6% Fibo of the 2017-2018 drop).

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