- The DXY index falls below the 93.00 level after the US CPI data.
- Both headline and core CPI were unchanged month-on-month in October.
- Initial US jobless claims increased by 709,000 for the week, improving expectations.
The US Dollar DXY Index, which measures the strength of the dollar against a basket of major currencies, is moving slightly in negative territory below the 93.00 level Thursday.
US dollar DXY index struggles to find direction ahead of Powell
The DXY index is retracing the previous move above the round 93.00 level amid alternating trends in risk appetite and always in the context of a widespread cautious stance as investors measure the progress of the pandemic against possible vaccines.
Also, the dollar is still unable to regain further traction to the upside after US inflation figures fell short of expectations in October, and both the headline CPI and the underlying index showed flat month-on-month readings.
On the other the, weekly initial jobless claims increased by 709,000, improving previous estimates and reverting to confirm the downtrend observed since the beginning of April.
During the American session, the Fed chairman, Jerome Powell, will share an online panel discussion with Christine Lagarde from the ECB and Andrew Bailey from the Bank of England, all in the framework of the Central Banking Forum of the ECB.
What can we expect around the USD?
The recovery of the DXY index appears so far limited by the 93.30 region. Meanwhile, the dollar remains focused on the post-election scene in the United States, where all eyes are on (still) President Trump and his potential attempts to challenge some results in various states. 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. On the other hand, further progress should be made 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 losing 0.15% on the day, trading at 92.85. 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 92.97 (November 10 high), would open the door to 93.29 (55-day SMA) and finally 94.30 (November 4 high).
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Credits: Forex Street
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