- The DXY Index loses more momentum and is approaching 93.20.
- Democratic candidate Joe Bide continues to lead the election results.
- Initial jobless claims and the FOMC decision are prominent on today’s economic calendar.
The US Dollar DXY Index, which measures the strength of the dollar against a basket of the main currencies, partially returns the advance of the previous day and trades closer to the 93.00 level at the start of the European session on Thursday.
DXY US Dollar Index focuses attention on FOMC and data
The DXY index moves with a weak tone in the early hours of the European morning, as the vote counting process continues after Tuesday’s elections and with the Democratic candidate Joe Biden still leading the way to the White House.
Regarding the latter, risk appetite has returned to the markets And thus it is putting further downward pressure on the US dollar, somewhat offsetting concerns about the progress of the pandemic and its impact on global growth prospects.
Later in the day, all attention will be on deciding monetary policy of the FOMC, followed in importance by the weekly release of Challenger’s initial jobless claims and job cuts.
What can we expect around the USD?
The DXY index failed to extend the move above the 94.30 region on Wednesday and instead appears to have resumed the decline towards the 93.00 level. The growing likelihood of a Biden presidency continues to weigh on the dollar, although the prospects for a “blue wave” appear dim. From a more macro perspective, the impact of the second wave of the coronavirus pandemic on the economy could favor the resurgence of risk aversion and therefore offer some support for the dollar. Later in the day, the dollar should remain under pressure in light of the key data release and the FOMC meeting.
Relevant levels of the US dollar index DXY
At the time of writing, the DXY index is shedding 0.19% on the day, trading at 93.30. Immediate support is at 93.09 (Nov 3 low), followed by 92.47 (Oct 21 low) and 91.92 (23.6% Fibonacci retracement of 2017-2018 dip). On the other hand, a breakout of 94.30 (November 3 high) would open the door to 94.74 (September 25 high) and finally 96.03 (50% Fibonacci retracement of the 2017-2018 crash).
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Credits: Forex Street
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