- DXY adds to Thursday’s losses below the 93.00 mark.
- Focus remains on the pandemic and the economic recovery.
- US Producer Prices, flash Consumer Sentiment next in the docket.
The greenback trades on a soft note and adds to Thursday’s negative price action in the sub-93.00 region when measured by the US Dollar Index (DXY) on Friday.
US Dollar Index looks to pandemic, data
The index is shedding ground for the second session in a row at the end of the week, although the trading range remains quite narrow.
In the meantime, the relentless pick up in coronavirus infections in the US and overseas economies continues to undermine the ongoing rebound in the economic activity. In fact, Chief Powell along with his peers from the ECB and the BoE suggested on Thursday that even with the prospects of a vaccine in the somewhat short-term horizon, the risks remain tilted to the downside when comes to economic growth.
In the US data space, October’s Producer Prices are due in the first turn seconded by the preliminary reading of the Consumer Sentiment for the current month. In addition, NY Fed J.Williams (permanent voter, centrist) and St. Louis Fed J.Bullard (2022 voter, dovish) are due to speak.
What to look for around USD
DXY’s recovery appears capped by the 93.30 area so far. In the meantime, the dollar remains focused on the post-elections scenario and a the prospects of the US economy under the Biden administration. On the more macro view, the impact of the second wave of the pandemic on the global economy could favour the occasional re-emergence of the risk aversion and therefore lend some support to the buck, while extra progress regarding vaccines against the COVID-19 should support momentum in the risk complex. Further out, the “lower for longer” stance from the Federal Reserve is expected to keep limiting a potential serious upside in the dollar.
US Dollar Index relevant levels
At the moment, the index is losing 0.06% at 92.90 and faces immediate contention at 92.13 (monthly low Nov.9) followed by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018). On the other hand, a breakout of 93.20 (weekly high Nov.11) would open the door to 93.86 (100-day SMA) and finally 94.30 (monthly high Nov.4).
Share
