- The DXY index is moving higher and is approaching the 93.00 level.
- Stagnant stimulus talks favor the safe-haven dollar.
- Initial jobless claims in the US fall below 800,000 for the first time since the start of the pandemic.
The US Dollar DXY Index, which measures the strength of the dollar against a basket of major currencies, maintains its optimistic tone intact and is approaching the round level of 93.00.
The US dollar index regains traction near 93.00
After testing new multi-week lows near the 92.50 region on Wednesday, the DXY index has managed to regain its composure and is now flirting with the key barrier near 93.00.
Negotiations on additional US stimuli have stalled in recent hours, which has given the dollar reason enough to regain lost ground as risk aversion returns to the markets. Further, caution continues to grow before final presidential debate between President Trump and Democratic candidate Joe Biden.
Backing the dollar, the weekly report on the US labor market has shown that Initial requests increased by 787,000 over the past week, the first figure below 800,000 requests since the start of the pandemic at the end of March.
Existing home sales data for September will be released later ahead of Richmond Fed Governor Thomas Barkin’s speech.
What can we expect around the USD?
The DXY index remains under pressure, particularly after breaking below the round 93.00 level in recent hours and reaching fresh multi-week lows on Wednesday. The move down came alongside growing hopes for additional US stimulus, although this view has lost some steam lately. Meanwhile, and also weighing on the dollar, expectations of a “blue wave” victory in next month’s presidential elections continue to rise. The fragile outlook around the dollar is also reinforced by the Federal Reserve’s “low-for-longer” rate stance.
Relevant levels of the US dollar index DXY
At the time of writing, the DXY index is gaining 0.25% on the day, trading at 92.85. A break above 93.90 (October 15 high), would expose 94.20 (38.2% Fibonacci retracement from the 2017-2018 dip) and 94.74 (September 25 high). On the other hand, immediate support is at 92.47 (October 21 low), followed by 91.92 (23.6% Fibonacci retracement from the 2017-2018 drop) and 91.80 (May 2018 low).
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Credits: Forex Street
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