US dollar DXY index retreats from highs just below 94.00 level

• The DXY index returns part of the gains and moves back towards the 93.70 region.
• The markets’ attention remains on US politics and the second wave of COVID-19.
• Retail sales data, University of Michigan consumer sentiment and industrial production data stand out on today’s US calendar.

He US Dollar DXY Index, which measures the strength of the dollar against a basket of major currencies, is moving slightly in negative territory after failing to overcome the 94.00 barrier early in the Friday session.

DXY US Dollar Index focuses attention on data

The DXY index has wavered near the 94.00 level at the beginning of the Asian session and has caused a slight pullback as world markets continue to seek a clearer direction during the Old Continent session.

In the meantime, American politics remains in the limelight less than 20 days to the presidential election and with the stagnation around new fiscal stimuli still unresolved. Additionally, the relentless advance of the coronavirus pandemic threatens to affect the global recovery and puts risk appetite under additional pressure.

Regarding the US data, the focus will be on the retail sales data for the month of September, followed in relevance by the data for industrial / manufacturing production, capacity utilization and the indicator Preview of Consumer Sentiment from the University of Michigan. Also, New York Fed Governor J. Williams has a speech scheduled.

What can we expect around the USD?

The DXY index remains so far supported by the 93.00 zone in the context of an alternation in risk appetite trends. However, occasional bullish attempts on the DXY index are considered temporary as underlying sentiment towards the dollar remains cautious to bearish. This view is reinforced by the Federal Reserve’s “low-for-longer” rate stance, hopes for a strong recovery in the world economy, negative stance in the speculative community, and mounting stakes for a “wave” victory. blue ”in the November elections. Developments around another fiscal stimulus package also contribute to the vigilant stance around the dollar.

Relevant levels of the US dollar index DXY

At the time of writing, the DXY index is down 0.03% on the day, trading at 93.75. Immediate support is at 93.01 (Oct 12 low), followed by 92.70 (Sept 10 low) and 91.92 (23.6% Fibonacci retracement of 2017-2018 dip). On the other hand, a break above 94.20 (38.2% Fibonacci retracement of the 2017-2018 dip), would target 94.74 (September 25 high) and finally 96.03 (50% Fibonacci retracement of the dip 2017-2018).