- DXY loses more ground and returns to the 92.50 area.
- Biden maintains the lead against Trump while the vote count is underway.
- Initial US claims reached 751,000 during the past week.
The US Dollar Index (DXY), which tracks the dollar against a basket of its main competitors, remains on the defensive in the vicinity of 92.50, or 2-month lows.
US Dollar Index Offered By Risk Appetite, Looks At FOMC
The index accelerates the decline and tests the levels last seen in mid / late October around 92.50 in the context of the strong sentiment surrounding the risk space.
The upbeat tone on riskiest assets comes in response to mounting stakes for a Biden presidency as the Democratic nominee remains in the lead with six states still counting votes.
In the US data space, weekly claims increased by 751,000, disappointing initial expectations. Previously, Challenger job cuts were down to 80,870 in October (from 118,800).
Later in the session, the FOMC is predicted to keep the federal funds target range unchanged at 0.00% -0.25%.
What to look for around USD
The index failed to extend the move above 94.30 on Wednesday and instead appears to have resumed the decline towards the 93.00 level. The increasing likelihood of a Biden presidency continues to weigh on the dollar, although the prospects for a “blue wave” appear largely dim. From a more macro perspective, the impact of the second wave of the pandemic on the economy could favor the resurgence of risk aversion and, therefore, some support for the dollar. Later in the session, the dollar should remain under the microscope in light of the key data releases and the FOMC meeting.
Technical levels
Right now, the index is shedding 0.80% to 92.72 and faces immediate containment at 92.47 (Oct 21 monthly low) seconded by 91.92 (23.6% Fibonacci from the 2017-2018 drop) and then 91.80 ( monthly minimum of May 2018). On the other hand, a breakout of 94.30 (monthly high of November 3) would open the door to 94.74 (monthly high of September 25) and finally to 96.03 (50% Fibonacci of the fall of 2017-2018).
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Credits: Forex Street
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