- The DXY index regains traction and advances to the 92.70 zone.
- The pandemic and vaccines remain in the spotlight until now.
- Initial jobless claims and the Philadelphia Fed Manufacturing Index stand out on today’s economic calendar.
The US Dollar DXY Index, which measures the strength of the dollar against a basket of major currencies, reverses the recent downward movement and Rises back to multi-day highs in the region of 92.70 / 75 Thursday.
US dollar index focuses attention on data and pandemic
After five consecutive daily declines, the DXY index finally manages to regain some strength and rises again towards the 92.70 region, in maximum of 3 days, during the European session on Thursday.
The dollar’s rally appears to be sustained by a resurgence of risk aversion among investors due to increased coronavirus cases worldwide while optimism about news of possible vaccines seems to be fading.
Further, the uncertainty in the Brexit negotiations and the potential political turmoil in Europe they also contribute to the prevailing tone of caution in global markets.
Turning to US data, initial weekly jobless claims will be the focus of investors’ attention, followed by the Fed and Philadelphia Manufacturing Index, Existing Home Sales Data, the Leading Indicator for the CB and the speech of the governor of the Cleveland Fed, Loretta Mester.
What can we expect around the USD?
The DXY index’s slide stopped just above the 92.00 region following the resurgence of risk-off sentiment. 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 dollar continues to measure the impact of the second wave of the pandemic on the global economy in the face of further progress in vaccines against COVID-19. On another front, 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 gaining 0.37% on the day, trading at 92.66. A breakout of 93.20 (November 11 high) would open the door to 93.67 (100-day SMA) and 94.30 (November 4 high). On the other hand, immediate support is at 92.13 (November 9 low), followed by 91.92 (23.6% Fibonacci retracement from the 2017-2018 drop) and 91.80 (May 2018 low).
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