US dollar DXY index retreats from highs, capped below 94.00 level

• The DXY index faces some selling pressure just below 94.00.
• The risk complex recovers buying interest on Friday.
• The PCE, personal income and spending data, and consumer sentiment from the University of Michigan 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, loses some traction to the upside and pulls back from Thursday’s new monthly highs past the 94.00 level during the European session on Friday.

The US Dollar DXY Index focuses attention on risk trends and data

After four consecutive sessions with gains, the DXY index is now losing some momentum and returns below the 94.00 region after hitting highs near 94.10 on Thursday.

In fact, growing concerns about the coronavirus, diminishing hopes for additional US stimulus and better-than-expected results in US economic data. They have been contributing with the best sentiment around the dollar in recent days.

Regarding US data, inflation figures measured by the PCE (the Fed’s preferred measure), personal income and spending data for the month of September will be released today along with sentiment of the final consumer for October and the Chicago PMI.

What can we expect around the USD?

The DXY index managed to climb back above the key level of 94.00 on Thursday, simultaneously reaching new monthly highs. The current recovery of the dollar comes in response to the impact of the COVID-19 pandemic on global growth prospects, as well as the diminishing chances of an agreement between Democrats and Republicans on a new stimulus bill. However, the dollar stance is likely to deteriorate in the event of a “blue wave” after the presidential election next month, while the Federal Reserve’s “lower for longer” stance also limits attempts. occasional bulls.

Relevant levels of the US dollar index DXY

At the time of writing, the DXY index is down 0.07% on the day, trading at 93.86. Immediate support is at 92.47 (Oct 21 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 above 94.10 (October 29 high), would expose 94.20 (38.2% Fibonacci retracement from the 2017-2018 drop) and finally 94.74 (September 25 high).