The US dollar index bounces away from lows near 93.50

• DXY remains on the defensive at the end of the week near 93.70.
• US retail sales surprised to the upside in September.

The US Dollar Index (DXY), Measuring the dollar against a basket of its main rivals, it remains on the defensive so far this Friday.

The US dollar index on the lookout for additional data

Despite the current corrective decline, the index is expected to close the week with gains and reverse the 2-week negative streak. So far, it appears that the 93.00 level has emerged as a fairly solid containment area, while the 94.00 region looks like a tough nut to crack for USD bulls at the moment.

Meanwhile, in the United States, discussions of an additional stimulus package remain stalled and investors have begun to dismiss any developments on this issue at least until after the November elections have passed.

Meanwhile, the focus is expected to shift to the relentless advance of the second wave of the COVID-19 pandemic and its impacts on the already nascent economic recovery around the world.

In the US data space, retail sales expanded 1.9% month-on-month in September, more than initially estimated. Core sales followed suit, beating forecasts by 1.5% MoM. According to additional data, industrial production unexpectedly contracted to 0.6% monthly in September, while manufacturing production also had a positive effect, contracting 0.3% from the previous month. Capacity utilization was also below estimates, declining to 71.5% during the same period.

What to look for around USD

The index remains so far supported by 93.00 in the context of alternating trends in risk appetite. Occasional bullish attempts, however, are considered temporary, as the underlying sentiment towards the dollar remains cautious or bearish. This view is reinforced by the Federal Reserve’s “Longer Low” stance, hopes for a strong recovery in the global economy, negative stance in the speculative community, and mounting stakes for a “blue wave” victory. ”In the November elections. Developments around another US stimulus package also contribute to the vigilant stance around the dollar.

Technical levels

At the moment the index is shedding 0.17% to 93.62 and faces immediate containment at 93.01 (Oct 12 monthly low) followed by 92.70 (Sept 10 weekly low) and then 91.92 (Fibonacci 23.6% of the dip). 2017-2018). On the other hand, a breakout above 94.20 (38.2% Fibonacci retracement from the 2017-2018 dip) would target 94.74 (September 25 monthly high) and finally 96.03 (50% Fibonacci from the 2017 dip -2018).