US Dollar Index regains some ground and returns to 93.30, Fedspeak in sight

• DXY remains depressed in multi-day lows near 93.20.
• Stimulus hopes keep weighing on the dollar on Monday.
• The NAHB Index improved further to 85 in October (from 83).

The selling bias around the greenback stays well and sound and drags the US Dollar Index (DXY) to the 93.20 region, or new 4-day lows.

US Dollar Index offered on politics

The index adds to Friday’s decline and drops to multi-day lows in the 93.20 region on Monday, managing to regain some composure soon afterwards.

The moderate pullback in the dollar comes amidst rising speculations that a new stimulus bill could be further discussed later in the week. It is worth recalling that Trump’s proposal last week came in significantly short of expectations, opening the door to further political uncertainty and extra wings to the buck.

In the US data space, the NAHB Index surpassed consensus in October at 85 (from 83) and reached a fresh record high.

Nothing worth mentioning from Powell’s discussion panel on digital currencies earlier in the session, while FOMC’s R.Clarida (permanent voter, dovish), New York Fed J.Williams (permanent voter, centrist), Atlanta Fed R.Bostic (2021 voter, centrist) and Philly Fed P.Harker (voter, hawkish) are all due to speak later.

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 0.41% at 93.34 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).