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US Dollar Index around 101.60 on US Bipartisan deal

  • DXY remains on the defensive in the 101.50/60 band.
  • US White House, Senate, Democrats agreed on extra stimulus.
  • Durable Goods Orders, House Price Index next on the docket.

The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main competitors, is adding to Tuesday’s losses and navigates the 101.50/60 band ahead of the opening bell in the Old Continent.

US Dollar Index unfazed by COVID-19 deal

The index has moved to the mid-101.00s amidst a so far bearish performance in the middle of the week, extending the correction lower following Tuesday’s pullback.

The dollar has practically ignored the recently clinched deal between the White House, the Senate and Democrats on another package of extra stimulus to fight the impact of the COVID-19 pandemic on the US economy. In fact, DXY attempted a bullish reaction, although it has quickly returned to levels pre-deal.

Later in the NA session, February’s Durable Goods Orders are due seconded by the House Price Index for the month of January and the EIA’s report on US crude oil inventories.

What to look for around USD

DXY keeps correcting lower following another rejection of the 103.00 region, or 3-year highs, earlier in the week. Further stimulus measures announced by the Fed and the US government lifted spirits in the risk-associated space and put the buck under some extra pressure, also collaborating with the leg lower. The recent sharp upside momentum in the dollar has been sustained by firm demand on the back of funding concerns, while easing monetary conditions by central banks other than the Fed have been also collaborating with the upbeat sentiment around the greenback. In the meantime, developments from the coronavirus pandemic and the global response to fight its impacts are expected to keep driving the sentiment in the global markets.

US Dollar Index relevant levels

At the moment, the index is losing 0.26% at 101.51 and faces the next support at 100.49 (78.6% Fibo of the 2017-2018 drop) followed by 99.91 (monthly high Feb.20) and then 98.45 (55-day SMA). On the flip side, a breakout of 102.99 (2020 high Mar.20) would open the door to 103.65 (monthly high December 2016) and finally 103.82 (monthly high January 2017).

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