US Dollar Index recedes from tops around 94.60, Powell in sight

• DXY moves to fresh tops around 94.60 after losing some momentum.
• US weekly Claims rose more than expected by 870K.
• Housing data, Fed’s Jerome Powell next on tap in the calendar.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its man rivals, keeps pushing higher and clinches new 2-month tops in the 94.55/60 band.

US Dollar Index firmer on risk-off mood, waits for Powell

The index extends the winning streak for yet another day on Thursday and now trades at shouting distance from the interim hurdle in the 94.80 region, where is located the 6-month resistance line ahead of another minor hurdle at the 100-day SMA near 95.60.

In the meantime, investors continue to favour the dollar against the backdrop of rising concerns that the unabated pandemic could hamper the economic recovery. Also bolstering the risk aversion bias, uncertainty around further discussions on a potential extra stimulus bill keeps running high with no solution on the horizon for the time being.

In the US data space and while investors wait for the testimony by Chief Jerome Powell before the House Select Committee, Initial Claims rose by 870K WoW, more than initially estimated. Later in the session, New Home Sales for the month of August are also due.

What to look for around USD

The dollar keeps the buying bias unchanged in the second half of the week, looking to stabilize the recent breakout of the 94.00 barrier. The ongoing and moderate bullish move in DXY is (still) seen as temporary, however, as the underlying sentiment towards the greenback remains on the negative side. 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 0.15% at 94.48 and a break above 94.49 (monthly high Sep.24) would open the door to 95.59 (100-day SMA) and finally 96.03 (50% Fibo of the 2017-2018 drop). On the other hand, the next support emerges at 92.70 (weekly low Sep.10) seconded by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.75 (2020 low Sep.1).