US Dollar Index weaker, challenges lows near 93.20

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  • DXY loses the grip and abandon the area of daily highs.
  • US flash Q2 GDP came in at -32.9, a tad above forecasts.
  • Initial Claims increased by more than 1.4 million last week.

The US Dollar Index (DXY), which tracks the buck vs. a basket of its main rivals, has now reversed the initial optimism and is flirting with recent lows in the 93.20 region.

US Dollar Index offered post-upbeat data releases

The index could not sustain the positive start of the day and the advance to tops near 93.70, losing further momentum following better-than-forecasted results from the US docket.

In fact, it seems risk appetite trends have woken up after flash Q2 GDP figures and weekly Initial Claims came in above expectations, encouraging investors to re-shift their focus to the risk-associated universe.

Initially, the greenback managed well to digest the dovish tone from the FOMC meeting, although the underlying bearish tone in the buck seems to still prevail among investors.

What to look for around USD

The dollar remains under heavy pressure despite the ongoing rebound, as investors keep the bearish stance on the currency unchanged against the usual backdrop of US-China geopolitical jitters, the spread of the pandemic and efforts to return to a somewhat normal economic activity. Also weighing on the buck, market participants seem to have shifted their preference for other safe havens instead of the greenback on occasional bouts of risk aversion. On another front, the speculative community kept adding to the offered note around the dollar for yet another week, opening the door to a potential development of a more serious bearish trend in the dollar.

US Dollar Index relevant levels

At the moment, the index is gaining 0.07% at 93.32 and a break above 94.20 (38.2% Fibo of the 2017-2018 drop) would open the door to 96.03 (50% Fibo of the 2017-2018 drop) and finally 96.98 (55-day SMA). On the other hand, the next down barrier lines up at 93.18 (2020 low Jul.29) seconded by 91.80 (monthly low May 18) and finally 89.23 (monthly low April 2018).

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