- The DXY index remains under pressure and is targeting 91.00.
- The dollar falls to 2020 lows in the region of 91.10.
- The release of the ADP report, Powell’s testimony, and the Fed’s Beige Book stand out on today’s economic calendar.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, manages to gain some traction to the upside after posting new yearly lows around the 91.10 level, area last visited April 2018.
DXY US Dollar Index Under Pressure, Focusing On Data And Powell
After bottoming out at the 91.10 zone, at new 2020 lows, the DXY index manages to recoup some buying interest and now back to the 91.30 / 40 zone during the European session on Wednesday.
Meanwhile, the dollar continues to struggle to find demand as a safe haven due to optimistic sentiment in the market caused by growing optimism of potential coronavirus vaccines expected to be delivered in the coming months.
Later in the day, investors’ attention will turn to the release of ADP’s private sector jobs report for November, MBA weekly mortgage application data, EIA report on crude oil reserves, the Fed’s Beige Book and President Powell’s second testimony, this time before the House Financial Services Committee.
Additionally, R. Quarles of the FOMC, J. Williams of the New York Fed, and P. Harker of the Philadelphia Fed have speeches scheduled later in the session.
What can we expect around the USD?
The bearish stance does not abandon the US dollar and dragged the DXY index to fresh yearly lows around the 91.10 level on Wednesday. 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 up 0.04% on the day, trading at 91.33. A breakout of 92.80 (November 23 high) would open the door to 93.20 (November 11 high) and 93.24 (100-day SMA). On the other hand, the next support is at 91.10 (December 2 low), followed by 89.22 (April 2018 low) and 88.94 (March 2018 low).
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