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US dollar DXY index remains under pressure around 91.70 ahead of Powell and US data.

  • The DXY index remains under pressure well below the 92.00 level.
  • The appetite for risk prevails among market participants.
  • Powell’s testimony and ISM manufacturing PMI data 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, remains under pressure below the key level of 92.00 during the European session on Tuesday.

US Dollar DXY Index: Prospects Still Fragile

Bearish momentum around the DXY index holds firm for another day in the first half of the week.

In fact, the DXY index is moving on a downward trajectory along the 8-month support line at the 91.80 / 70 band, always under pressure. in the context of investors’ risk appetite.

The bearish view of the dollar remains supported by the rising hopes for the development and distribution of a vaccine effective against coronavirus, optimism about additional fiscal / monetary stimulus in the US. in the relatively short term and the prospects for a strong rebound in the world economy.

During the American session, the ISM manufacturing PMI index will be published, which together with the testimony of Jerome Powell, president of the Fed, before the Senate on the “Law of aid, relief and economic security for the coronavirus”, will focus the attention of the investors.

Additionally, L. Brainard from the FOMC, M. Daly from the San Francisco Fed, and C. Evans from the Chicago Fed have speeches scheduled.

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 near the 91.50 level at the beginning of the week. 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 0.15% on the day, trading at 91.72. Next support is at 91.50 (November 30 low), followed by 89.22 (April 2018 low) and 88.94 (March 2018 low). On the other hand, a break of 93.20 (November 11 high), would open the door to 93.29 (100-day SMA) and finally 94.30 (November 4 high).

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