- The DXY index remains on the defensive near the 92.00 level.
- Risk appetite puts additional pressure on the dollar.
- The FOMC minutes, the PCE index and initial jobless claims 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, accelerates the downward movement and is approaching the 92.00 level on Wednesday.
US dollar DXY index weakens on risk appetite sentiment
The DXY index remains under pressure and flirt with the 8 month support line in the context of a solid improvement in risk appetite.
In fact, the US dollar continues to struggle to find demand due to optimism derived from potential coronavirus vaccines in the medium termWhile the formal start of the transition process to the Biden administration also contributes to the optimism of the market.
It will be a very interesting session on the American economic calendar before the Thanksgiving holiday from Thursday. In fact, initial jobless claims, PCE-measured inflation figures and the final index of consumer sentiment from the University of Michigan for November will draw investors’ attention ahead of the release of the FOMC minutes from its latest meeting.
Additionally, MBA mortgage applications, durable goods orders, third-quarter GDP growth rate, preliminary trade balance results, new home sales, and personal income / expenses will also be released during the American session today.
What can we expect around the USD?
The DXY index remains on the defensive and a visit to the 2020 lows near the 91.70 level is not ruled out on the near-term horizon. The improved risk appetite sentiment has been bolstered by a clearer US political landscape combined with upbeat news on vaccines and better growth prospects. In addition, hopes for additional fiscal stimulus have resurfaced, which together with the Federal Reserve’s “lower rates longer” stance is seen as keeping the USD under additional pressure for now.
Relevant levels of the US dollar DXY index
At the time of writing, the DXY index is down 0.12% on the day, trading at 92.11. The next support is at 92.01 (November 23 low), followed by 91.92 (23.6% Fibonacci retracement from the 2017-2018 dip) and 91.80 (May 2018 low). On the other hand, a break of 93.20 (November 11 high), would open the door to 93.48 (100-day SMA) and finally 94.30 (November 4 high).
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