US Dollar Index slips back to the 93.50 area ahead of data
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US Dollar Index slips back to the 93.50 area ahead of data

  • DXY extends losses to the 93.50 region on Thursday.
  • FOMC Minutes confirmed the firm note of the economic recovery.
  • Markets’ attention will be on the weekly Initial Claims later in the session.

The US Dollar Index (DXY), which measures the greenback vs. a basket of its main rivals, extends the leg lower to the mid-93.00s in the second half of the week.

US Dollar Index apathetic post-minutes, looks to data

The index loses ground for the second consecutive session and probes the 93.50 region so far on Thursday.

Minutes from the latest FOMC meeting released late on Wednesday confirmed the economy is recovery faster than initially estimated helped by fiscal stimulus provided by the government. In this regard, the Committee noted that extra fiscal stimulus remains crucial in supporting the economic rebound.

It is worth recalling that President Trump cancelled on Tuesday all discussions around further stimulus at least until after the November elections. On the latter, and with less than a month to go, Democrat candidate Joe Biden keeps leading the race to the White Hoouse.

Later in the session, investors will focus on the usual weekly report from Initial Claims, while Richmond Fed Thomas Barkin (2021 voter, centrist) is also due to speak.

What to look for around USD

The index appears to be moving into a consolidative phase, always below the key 94.00 barrier. Occasional bullish attempts in DXY, however, are (still) 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 political uncertainty ahead of the November elections.

US Dollar Index relevant levels

At the moment, the index is losing 0.02% at 93.58 and faces the next contention at 93.34 (monthly low Oct.6) followed by 92.70 (weekly low Sep.10) and then 91.92 (23.6% Fibo of the 2017-2018 drop). On the other hand, 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 94.99 (100-day SMA).

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