- DXY moves higher and retakes the 93.00 barrier.
- Fading stimulus prospects, pandemic fears sustain the dollar.
- New Home Sales, Chicago Fed Index next in the US calendar.
The greenback, when tracked by the US Dollar Index (DXY), fades further Friday’s pullback and advances to fresh daily tops in the 93.00 region at the beginning of the week.
US Dollar Index looks to politics, pandemic
USD-bulls regain the upper hand on Monday and lift the index back to the 93.00 neighbourhood amidst investors’ bias towards the safe haven universe.
In fact, the probability that US policymakers could reach a deal regarding extra stimulus before the November 3 presidential elections keeps losing traction along with increasing concerns over the impact of the second wave of the coronavirus pandemic on the global economy.
Later in the US docket, September’s New Home Sales will take centre stage ahead of the Chicago Fed index. Nothing scheduled in the Fedspeak galaxy, as the Federal Reserved entered into its “blackout period” ahead of the key November 6 elections.
What to look for around USD
The index managed to leave behind the downside pressure observed during last week and has reclaimed the 93.00 neighbourhood so far on Monday. The current recovery came in response to dying hopes of extra stimulus in the short-term horizon at least along with the unabated advance of the pandemic. On the other hand, bets of a “blue wave” win at the presidential elections next month remain on the rise and keep capping the dollar’s upside. The fragile view on the buck is also reinforced by the “lower for longer” stance from the Federal Reserve.
US Dollar Index relevant levels
At the moment, the index is gaining 0.30% at 93.02 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, immediate contention 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).
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