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  • DXY’s upside momentum remains well in place near 93.60.
  • Pandemic concerns give extra sustain to the risk aversion.
  • US advanced trade deficit shrunk to $79.37 billion in September.

The greenback extends the buying momentum and tests weekly peaks in the 93.60 zone when tracked by the US Dollar Index (DXY).

US Dollar Index underpinned by risk-off mood

The index extends its march north in the middle of the week and reaches the 93.60 level on the back of prevailing risk aversion in the global markets.

Indeed, rising coronavirus cases and the re-implementation of lockdown-like measures across Europe continue to give support to the resumption of the risk aversion and the ultimate demand for the safe havens.

In the US data space, advanced trade figures for the month of September showed the trade deficit is expected to shrink to $79.37 billion. Earlier in the session, weekly Mortgage Applications expanded 1.7% according to MBA. Later in the session, the EIA will report on the weekly variation of US crude oil inventories.

What to look for around USD

The index manages to regain the area above the key 93.00 barrier so far this week. The current recovery in the dollar comes in response to the impact of the COVID-19 pandemic on the global growth prospects as well as fading chances of a deal between Democrats and Republicans over a new stimulus bill. However, the stance on the dollar is likely to deteriorate in case of a “blue wave” following the presidential elections next month, while the “lower for longer” stance from the Federal Reserve also caps occasional bullish attempts.

US Dollar Index relevant levels

At the moment, the index is gaining 0.52% at 93.57 and a break above 93.90 (weekly high Oct.15) would expose 94.20 (38.2% Fibo retracement of the 2017-2018 drop) and finally 94.74 (monthly high Sep.25). On the other hand, the next support is located at 92.47 (monthly low Oct.21) followed by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018).