- The DXY index accelerates the upward movement and recovers the level of 91.00
- Risk-off sentiment lends support to the dollar.
- Consumer credit data stands out on today’s economic calendar.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, regains its smile at the beginning of a new week and rises to new 3-day highs above the 91.00 level.
US Dollar DXY Index on 3-Day Highs
The DXY index is finally showing some signs of life after four consecutive daily falls and manages to regain the key 91.00 level, while recording new multi-day highs.
Renewed concerns about the performance of the US economy following disappointing NFP nonfarm payrolls on Friday, coupled with persistent lack of solid progress in Brexit negotiations and a certain profit-taking sentiment have helped sustain the DXY index rally amid the emergence of risk aversion in global markets.
For the US data, the only release will be the consumer credit data for the month of October.
What can we expect around the USD?
The DXY index manages to regain some traction and advances above the 91.00 level after last week’s slide to 32-month lows around 90.50. The current correction in the risk-associated complex is driving the rebound in the DXY index, although further bullish attempts are considered short-lived. In addition, the outlook for the dollar remains on the bearish side amid the increasing likelihood of additional monetary / fiscal stimulus in the US economy, the Federal Reserve’s “low rates for longer” stance and rising rates hopes for vaccines.
Relevant levels of the US dollar DXY index
At the time of writing, the DXY index is up 0.55% on the day, trading at 91.19. A breakout of 91.92 (23.6% Fibonacci retracement of the 2017-2018 dip), would open the door to 92.80 (November 23 high) and 93.20 (November 11 high). On the other hand, immediate support is at 90.47 (December 4, 2020 low), followed by 89.22 (April 2018 low) and 88.94 (March 2018 low).
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