US Dollar Index DXY Extends Rise Above 94.00 Level, Focus Shifts to ISM and Elections

• The DXY index is moving higher and above the 94.00 level on Monday.
• The global spotlight remains on the upcoming presidential election on Tuesday.
• The publication of the ISM Manufacturing PMI will be the highlight event at the start of the American session.

The US Dollar DXY Index, which measures the strength of the dollar against a basket of major currencies, remains firm and advances above the 94.00 level so far Monday.

US dollar DXY index focuses attention on data and elections

The DXY index moves above the 94.00 level at the beginning of the week, as risk aversion increases in global markets. The DXY index has thus managed to extend the movement to the 94.20 / 30 region, where the 100-day SMA and a Fibonacci retracement of the 2017-2018 dip coincide.

The relentless advance of the coronavirus pandemic, coupled with the re-implementation of stricter restrictions In many countries in Europe, they continue to weigh on the prospects for global economic growth and therefore benefits the current bias in favor of the US dollar.

Further, caution and uncertainty they continue to rise as we approach the US presidential elections to be held on Tuesday. Although polls favor a victory for Democratic candidate Joe BidenIt is worth remembering the pre-election scenario between H. Clinton and D. Trump 4 years ago. Adding to the current strength of the USD is the persistent probability of a contested election.

When it comes to US data, the ISM Manufacturing PMi for October will be the highlight of the day, followed by Markit’s final Manufacturing PMI.

What can we expect around the USD?

The DXY index will rebound above the key 94.00 level on Monday amid continued risk aversion sentiment among market participants. The current recovery of the dollar continues to be underpinned by pandemic fears and growing uncertainty ahead of the November 3 election. Furthermore, market rumors regarding additional US fiscal stimulus seem relegated until at least after the election. Meanwhile, the dollar is expected to remain under pressure, as consensus among analysts predicts a deterioration in the dollar outlook should Joe Biden become the next US president. Another risk event will take place. later in the week with the FOMC monetary policy meeting, this time on Thursday.

Relevant levels of the US dollar index DXY

At the time of writing, the DXY index is gaining 0.38% on the day, trading at 94.23. A breakout of 94.74 (September 25 high), would open the door to 96.03 (50% Fibonacci retracement of the 2017-2018 dip) and 96.60 (200-day SMA). On the other hand, immediate support is at 93.30 (55-day SMA), followed by 92.47 (Oct 21 low) and 91.92 (23.6% Fibonacci retracement from the 2017-2018 dip).