- The DXY index looks firm and is advancing above the 93.00 level on Thursday.
- Investors’ attention continues to be the pandemic and possible vaccines.
- Inflation figures and initial US jobless claims will be released today.
The US Dollar DXY Index, which measures the strength of the dollar against a basket of major currencies, seeks to extend recent breakout of key 93.00 level at the start of the European session on Thursday.
US dollar DXY index focuses attention on data and pandemic
The DXY index resumes the weekly rise and extends the rebound from Monday’s 2-month lows in the 92.15 / 10 region. At the time of writing, recovery has faltered near 93.20, area that coincides with the 55-day SMA.
Meanwhile, optimism around an effective vaccine seems to be fading, while the relentless advance of the coronavirus pandemic, as well as stricter restriction measures, continue to weigh on prospects for recovery of the world economy.
Regarding US data, inflation figures for the month of October will be high on the economic agenda, followed by initial weekly jobless claims and the weekly EIA report on US crude oil supplies.
In addition, investors are expected to closely follow the events of the ECB Forum on Central Banking, with the participation of Christine Lagarde, President of the ECB, Jerome Powell, President of the Fed and Andrew Bailey, Governor of the Bank of England, in an online discussion panel.
Additionally, Chicago Fed Governor C. Evans and New York Fed Governor J. Williams also have speeches scheduled during the American session.
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 gaining 0.01% on the day, trading at 93.00. 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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