- The DXY index lacks a clear direction and is hovering around 93.40.
- Investors’ attention shifts to the final debate between Trump and Biden.
- Housing data and speeches by Fed members stand out on the US calendar.
The US Dollar DXY Index, which measures the strength of the dollar against a basket of major currencies, moves within a narrow range in the region of 93.40 on Tuesday.
The US Dollar DXY Index focuses attention on politics and the pandemic
The DXY index is moving without a clear direction after the moderate retracement recorded at the beginning of the week.
In fact, hopes for a US stimulus deal They fueled strong risk appetite on Monday, causing the safe-haven US dollar to slide to the 93.20 region, at multi-day lows. However, the increase in coronavirus cases worldwide, along with the implementation of new restriction measures in many countries, plus the uncertainty surrounding additional US stimulus, appear to have limited occasional bouts of selling pressure on the dollar.
When it comes to US economic data, the release of data for housing starts and building permits will focus investors’ attention and shed more light on morale in the US housing sector.
Also, R. Quarles of the FOMC and C. Evans of the Chicago Fed have speeches scheduled.
What can we expect around the USD?
The DXY index has found solid support in the 93.00 region so far this month. However, occasional bullish attempts are considered temporary as the underlying sentiment towards the dollar remains cautious. This view is reinforced by the Federal Reserve’s “low-for-longer” rate stance, hopes for a strong recovery in the global economy, and mounting stakes for a “blue wave” victory in the November elections. Developments around another fiscal stimulus package also contribute to the vigilant stance on the dollar.
Relevant levels of the US dollar index DXY
At the time of writing, the DXY index is down 0.01% on the day, trading at 93.41. Immediate support is at 93.01 (Oct 12 low), followed by 92.70 (Sept 10 low) and 91.92 (23.6% Fibonacci retracement of the 2017-2018 dip). On the other hand, a break above 94.20 (38.2% Fibonacci retracement of the 2017-2018 dip), would target 94.74 (September 25 high) and finally 96.03 (50% Fibonacci retracement of the dip 2017-2018).
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Credits: Forex Street
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