The US Dollar index faces a huge day as the European Central Bank announces their latest rates and policy decision while the U.S. economy sees a third quarter GDP that is being estimated at a gain of 30-35%.
The DXY has been moving higher this week after talks for a second U.S. stimulus package stalled once more. The index is also seeing safe haven gains with the surge in virus cases around the globe, particularly in Europe. The Euro is the largest constituent in the weighted index with over 50% so any weakness in the euro is pronounced in the DXY.
The euro could be a driver of further dollar gains today as the European Central Bank announces their latest interest rate decision. Economists expect the bank to hold firm on rates but the press conference should see comments on further stimulus. The ECB are in a dilemma with rates at 0% accompanied by weak growth and inflation. The bank have been critical of a strong euro and may seek to move it lower. The ECB had already been considering additional stimulus for December but the cases surge and new lockdowns will make this a certainty.
The other key release today is an advance look at Q-on-Q GDP for the U.S. economy. Q2 saw a -31.4% fall and today’s number is expected to see a 31% gain. The economy will still be negative for the year but a strong number would light a fire under the dollar with the U.S. election also looming.
US Dollar Index Technical Outlook
The US Dollar index has found support at the 93.00 level and is pushing higher towards the 93.82 resistance. A move above there on the week would be bullish and could a new trend develop towards 96-7.00. Stops can go at 93.00 for longs. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.