US Dollar Index meets contention near 92.20
- DXY stays immersed into the negative territory.
- US Retail Sales expanded less than estimated in October.
- US Industrial Production surprised to the upside last month.
The dollar’s offered stance remains well in place for yet another session and drags the US Dollar Index (DXY) to fresh multi-day lows near 92.20 on Tuesday.
US Dollar Index hurt by risk-on trade
The downside bias remains unchanged around the dollar despite concerns persist over the unabated advance of the pandemic along with increasing and tighter restriction measures in place by many countries in order to curb the rapid expansion of the coronavirus.
The greenback, however, appears offered as investors keep favouring the “glass half full” view, always backed by rising hopes that an effective coronavirus vaccine could be delivered sooner rather than later in tandem with a “V”-shaped economic rebound.
Earlier in the session, US Retail Sales expanded less than estimated during last month, while additional data showed the Industrial Production and Manufacturing Production expanded 1.1% and 1.0%, respectively, on a monthly basis. Extra data saw the Capacity Utilization rising to 72.8%.
Later, Business Inventories, TIC Flows and the NAHB Index will close the daily docket ahead of speeches by Atlanta Fed R.Bostic (2021 voter, centrist), San Francisco Fed M.Daly (2021 voter, centrist) and NY Fed J.Williams (permanent voter, centrist).
What to look for around USD
DXY stays offered and leaves the door open to extra downside in the near-term. In the meantime, the dollar remains focused on the post-elections scenario and a the prospects of the US economy under the Biden administration. On the more macro view, the impact of the second wave of the pandemic on the global economy could favour the occasional re-emergence of the risk aversion and therefore lend some support to the buck, while extra progress regarding vaccines against the COVID-19 should support momentum in the risk complex. Further out, the “lower for longer” stance from the Federal Reserve is expected to keep limiting a potential serious upside in the dollar.
US Dollar Index relevant levels
At the moment, the index is losing 0.29% at 92.37 and faces immediate contention at 92.13 (monthly low Nov.9) followed by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018). On the other hand, a breakout of 93.20 (weekly high Nov.11) would open the door to 93.76 (100-day SMA) and finally 94.30 (monthly high Nov.4).