- The DXY index remains under pressure at multi-day lows near 93.20.
- Stimulus hopes continue to weigh on the US dollar on Monday.
- The NAHB index improved further to 85 points in October (from 83).
The US Dollar DXY Index, which measures the strength of the dollar against a basket of major currencies, remains under selling pressure at the start of the American session on Monday, falling to the 93.20 region at fresh 4-day lows.
US dollar DXY index weakens on politics
The DXY index extends Friday’s slide and falls to multi-day lows in the 93.20 region on Monday, managing to recover slightly at the beginning of the American session.
The moderate decline in the dollar occurs amid the growing speculation that a new stimulus bill could be discussed later in the week. It’s worth remembering that Trump’s proposal last week fell far short of expectations, opening the door to further political uncertainty and giving the USD additional strength as a safe haven.
When it comes to US data, the NAHB index beat expectations in October reaching 85 points (from 83) and hit a new high.
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 0.41% on the day, trading at 93.34. 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).
Credits: Forex Street
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