US Dollar Index DXY Extends Fall To 92.40 Region Before Data

• The DXY index remains on the defensive and is approaching the 92.40 region.
• The markets’ attention remains on the pandemic in the face of the economic recovery.
• Data for US retail sales and industrial production will be released today, along with several speeches from the Fed.

The US dollar index DXY, which measures the strength of the dollar against a basket of major currencies, extends the momentum down and falls to the region of 92.50 / 45 on Tuesday.

US dollar DXY index focuses attention on pandemic and economic data

The DXY index goes back for the fourth day in a row on Tuesday amid mounting concerns about the relentless advance of the coronavirus pandemic en EE.UU.

This fact overshadows the optimism about a possible vaccine (following recent news from Pfizer and Moderna, and it keeps the US dollar under persistent downward pressure.

Interesting day for US data where the focus will be on Retail Sales and Industrial / Manufacturing Production, Capacity Utilization, Business Inventories, ICT Flows and the NAHB Index.

Additionally, Atlanta Fed Governor R. Bostic, San Francisco Fed Governor M. Daly, and New York Fed Chairman J. Williams are scheduled for speeches.

What can we expect around the USD?

The DXY index remains under pressure and leaves the door open for a further decline in the short term. Meanwhile, the dollar remains focused on the post-election scene in the United States and the outlook for the US economy under the Biden administration. From a more macro point of view, the impact of the second wave of the pandemic on the global economy could favor the occasional resurgence of risk aversion and thus provide some support for the US dollar, while progress should be made additional information regarding COVID-19 vaccines to support the boost in risk appetite. Beyond that, the Federal Reserve’s “lower rates longer” stance is expected to continue to limit serious upside potential in the DXY index.

Relevant levels of the US dollar index DXY

At the time of writing, the DXY index is down 0.09% on the day, trading at 92.56. Immediate support is at 92.13 (November 9 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 of 93.20 (November 11 high), would open the door to 93.76 (100-day SMA) and finally 94.30 (November 4 high).