US Dollar Index turns negative near 93.60 ahead of Powell, Fedspeak

• DXY sheds ground and recedes to the 93.65/60 band on Monday.
• Pandemic, politics keep driving the risk appetite trends.
• NAHB Index, Fedspeak next of relevance in the US calendar.

The greenback, when measured by the US Dollar Index (DXY), loses further momentum and drops to the 93.65/60 band following the opening bell in Europe on Monday.

US Dollar Index looks to data, risks

The index adds to Friday’s bearishness and challenges the 93.60 region on Monday, area coincident with the 6-month resistance line and just below last week’s tops around 93.90.

In the meantime, the dollar remains somewhat supported by a mild bias towards the risk aversion, stemming from stalled stimulus talks, the impact on the global economy of the second wave of the coronavirus pandemic, Brexit lack of progress and political uncertainty ahead of the November 3 elections.

In the US data space, the NAHB index will be the sole release later in the session along with speeches by Chief J.Powell, FOMC’s R.Clarida (permanent voter, dovish), New York Fed J.Williams (permanent voter, centrist), Atlanta Fed R.Bostic (2021 voter, centrist) and Ohilly Fed P.Harker (voter, hawkish).

What to look for around USD

The index met solid contention in the 93.00 region so far this month. Occasional bullish attempts, however, are seen as temporary, as the underlying sentiment towards the greenback remains cautious. This view is reinforced by the “lower for longer” stance from the Federal Reserve, hopes of a strong recovery in the global economy and rising bets of a “blue wave” win at the presidential elections. Developments around another US stimulus package also collaborate with the vigilant stance around the buck.

US Dollar Index relevant levels

At the moment, the index is losing 0.10% at 93.62 and faces immediate contention at 93.01 (monthly low Oct.12) followed by 92.70 (weekly low Sep.10) and then 91.92 (23.6% Fibo of the 2017-2018 drop). On the other hand, a break above 94.20 (38.2% Fibo retracement of the 2017-2018 drop) would aim for 94.74 (monthly high Sep.25) and finally 96.03 (50% Fibo of the 2017-2018 drop).