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  • DXY loses the grip further and challenges the 93.00 yardstick.
  • US politics and the stimulus package remain in centre stage.
  • Empire State index, NAHB index next of relevance in the docket.

The greenback, when tracked by the US Dollar Index (DXY), has started the week on a soft note and puts the 93.00 support to the test following the opening bell in Europe.

US Dollar Index looks to politics, data

The index is losing ground for the fourth consecutive session at the beginning of the week, challenging once again the key support at the 93.00 neighbourhood amidst the continuation of the upbeat mood in the risk complex.

In the meantime, all the attention remains on the US political scenario, where another fiscal stimulus bill stays in the centre of the debate between Republicans and Democrats. On the more macro view, risk appetite trends continue to benefit the riskier assets, keeping the dollar well under pressure.

Later in the US docket, the regional manufacturing gauge measured by the Empire State index will take centre stage seconded by the NAHB index and June’s TIC Flows.

What to look for around USD

The index remains on the defensive around the 93.00 neighbourhood, although bears could not push the dollar further south of 2020 lows in the mid-92.00s just yet. Looking at the broader picture, investors remain bearish on the dollar against the usual backdrop of a dovish Fed, the unabated advance of the pandemic and somewhat diminishing momentum in the economic recovery, whereas persistent US-China effervescence appears on the supportive side of the greenback.

US Dollar Index relevant levels

At the moment, the index is losing 0.07% at 93.03 and faces the next support at 92.89 (weekly low Aug.17) followed by 92.52 (2020 low Aug.6) and finally 91.80 (monthly low May 18). On the flip side, a break above 93.99 (weekly high Aug.3) would aim for 94.20 (38.2% Fibo of the 2017-2018 drop) and then 96.03 (50% Fibo of the 2017-2018 drop).