- The DXY index loses traction to the upside and retreats to the 90.70 area.
- The appetite for risk appears to have returned to the markets.
- JOLT mortgage applications, wholesale inventories and jobs report will be released during the American session.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, faces some selling pressure and falls back to the 90.70 region, at 2-day lows.
The US Dollar DXY Index appears to stabilize below 91.00
The DXY Index loses ground for the first time after two consecutive daily rises, all amid a mild recovery attempt and with so far limited rise around the 91.30 area.
The improved risk appetite in markets, supported by the likelihood of additional US fiscal stimulus in the short term, hopes for global growth, and a possible Brexit continues to weigh on safe-haven US dollar for the moment.
Regarding US economic data, during the American session on Wednesday the publication of data from MBA mortgage applications, US wholesale inventories and the JOLTs jobs report stands out. , along with the EIA’s weekly report on US crude oil inventories.
What can we expect around the USD?
The dollar’s bullish momentum loses steam and dragged the DXY index back below the 91.00 level on Wednesday due to improving risk appetite in the markets. In fact, 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 prospects for a strong economic recovery.
Relevant levels of the US dollar DXY index
At the time of writing, the DXY index is down 0.19% on the day, trading at 90.79. The next support is at 90.47 (December 4 low), followed by 89.22 (April 2018 low) and 88.94 (March 2018 low). On the upside, a breakout of 91.23 (December 7 high) would open the door to 91.92 (23.6% Fibonacci retracement from the 2017-2018 drop) and finally 92.80 (November 23 high).
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