- The DXY index recovers the initial decline and climbs back above 93.50.
- Sentiment remains cautious ahead of the ECB event.
- Initial jobless claims, third-quarter GDP and pending home sales data stand out on today’s US economic calendar.
The US Dollar DXY Index, which measures the strength of the dollar against a basket of major currencies, recovers from an initial drop to the region of 93.35 and rises back above the 93.50 level at the start of the European session on Thursday.
US dollar DXY index focuses attention on data and the ECB
The DXY index moves higher for the fourth day in a row, staying close to multi-day highs in the region of 93.60 / 65 reached on Wednesday.
The general cautious sentiment in global markets, amid mounting coronavirus concerns, has been fueling recent rebound in safe-haven US dollar demand, although the rally appears to have found resistance near 93.70 for the time being.
Also collaborating with the prevailing cautious stance is the ECB event scheduled for later on Thursday, while waiting for a pessimistic tone from the central bank.
Turning to US data, initial weekly jobless claims, advanced third-quarter GDP figures and pending home sales data for September will be released today.
What can we expect around the USD?
The DXY index has managed to rally above the key 93.00 barrier so far this week. 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 gaining 0.08% on the day, trading at 93.50. A break above 93.90 (October 15 high), would expose 94.20 (38.2% Fibonacci retracement from the 2017-2018 dip) and 94.74 (September 25 high). On the other hand, the next support is at 92.47 (October 21 low), followed by 91.92 (23.6% Fibonacci retracement from the 2017-2018 drop) and 91.80 (May 2018 low).
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Credits: Forex Street
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