After a brief drop to lows near 92.80 in the wake of data releases, the greenback managed to regain some upside traction and is now attempting to return to the 93.00 mark when measured by the US Dollar Index (DXY).
The index lost further momentum after headline Retail Sales expanded at a monthly 0.6% during last month and core sales expanded 0.7% MoM, both readings coming in below previous estimates.
These results add to the idea that the current recovery in the high street appears to be running out of steam amidst the unremitting advance of the coronavirus pandemic and despite encouraging news surrounding a probable vaccine by year-end.
Additional data in the US include the NAHB index, Business Inventories and the weekly report on crude oil inventories by the EIA.
Closing the calendar, the FOMC is expected to keep the FFTR unchanged, while the focus of attention at Powell’s press conference is seen gyrating around the newly announced Average Inflation Targeting (AIT) as well as the revised economic projections.
The rally in the dollar failed near 93.70 in the middle of last week, exposing the index to the resumption of the bearish trend. Occasional bullish attempts, however, are still considered as corrective only amidst the broad bearish stance surrounding the dollar. Supporting this view emerge a more dovish Fed, the unremitting progress of the coronavirus pandemic and political uncertainty ahead of the November elections. On the supportive side of the buck emerge occasional bouts of US-China tensions and the resumption of the risk aversion among investors.
US Dollar Index relevant levels
At the moment, the index is losing 0.15% at 92.94 and faces the next support at 92.70 (weekly low Sep.10) seconded by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.75 (2020 low Sep.1). On the other hand, a break above 93.66 (monthly high Sep.9) would open the door to 93.99 (monthly high Aug.3) and finally 94.20 (38.2% Fibo of the 2017-2018 drop).