US Dollar DXY Index Turns Negative Near 93.60 Before Powell

• The DXY index loses ground and falls back to the 93.65 / 60 region on Monday.
• The pandemic and US politics continue to drive trends and appetite for risk.
• The NAHB index and various speeches by Fed members 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, continues to lose momentum and falls to the region of 93.65 / 60 after the opening of the European session on Monday.

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

The DXY index extends Friday’s bearish move and challenges the 93.60 region on Monday, where is the 6-month resistance line and just below last week’s highs around 93.90.

Meanwhile, the US dollar is somewhat supported by slight risk aversion bias, stemming from the stagnation of the US fiscal stimulus talks, the impact on the world economy of the second wave of the coronavirus pandemic, the lack of progress on Brexit and the political uncertainty ahead of the elections on 3 November.

When it comes to US economic data, the NAHB index will be the only publication of interest during the American session, along with speeches by Fed Chairman J. Powell, R. Clarida of the FOMC, Governor from the New York Fed, J. Williams, from the president of the Atlanta Fed, R. Bostic, and from the governor of the Philadelphia Fed, P. Harker.

What can we expect around the USD?

The DXY index has found solid support in the 93.00 region so far this month. However, occasional bullish attempts are considered temporary as the underlying sentiment towards the dollar remains cautious. This view is reinforced by the Federal Reserve’s “low-for-longer” rate stance, hopes for a strong recovery in the global economy, and mounting stakes for a “blue wave” victory in the November elections. Developments around another fiscal stimulus package also contribute to the vigilant stance on the dollar.

Relevant levels of the US dollar index DXY

At the time of writing, the DXY index is down 0.10% on the day, trading at 93.62. Immediate support is at 93.01 (Oct 12 low), followed by 92.70 (Sept 10 low) and 91.92 (23.6% Fibonacci retracement of the 2017-2018 dip). On the other hand, a break above 94.20 (38.2% Fibonacci retracement of the 2017-2018 dip), would target 94.74 (September 25 high) and finally 96.03 (50% Fibonacci retracement of the dip 2017-2018).