- The DXY index extends Friday’s losses and falls to the 92.50 region.
- The European session begins with optimism.
- The New York Empire State Index and several Fed speeches 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, extends the downward movement to new multi-day lows in the region of 92.50 / 45 Monday.
US Dollar DXY Index focuses attention on risk trends and pandemic
The DXY index is losing ground for the third day in a row Monday due to continued better tone in risk appetite.
Indeed, European markets open the week higher as investors continue to measure the likelihood that a coronavirus vaccine can be delivered sooner rather than later (For the end of the year, maybe?) And increased optimism in the Biden presidency.
For US data, the New York Empire State manufacturing indicator will be released later in the day, along with speeches by R. Clarida from the FOMC and M. Daly from the San Francisco Fed.
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 0.25% on the day, trading at 92.47. 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 93.86 (100-day SMA) and finally 94.30 (November 4 high).
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