The US dollar index bounced on Monday as the market reacted to the news of a potential coronavirus vaccine. The safe haven element of the dollar gave way to the hopes that the end of lockdowns would slow the trajectory of US government and central bank spending.
The potential for a vaccine has also coincided with an election stalemate as the Trump campaign continues its legal challenges to the vote. The dollar has struggled with the idea of a Biden Presidency as it would mean higher stimulus spending. The vaccine news and the potential for President Trump to still see a second term is reducing the bearish bets on the dollar.
The Euro was unable to gain against the dollar today after a weaker German ZEW confidence survey gave traders a first hint that the second lockdowns across Europe would lead to a slowdown in the important indicators. Tomorrow also sees speeches from the ECB President Christine Lagarde and Vice-President Luis de Guindos. De Guindos warned last week that the Eurozone was set for another print of negative GDP in the fourth quarter.
Thursday will see inflation data for the German and the United States economies with the former expected to print a -0.2% number, while the U.S. is expected to grow by 0.1% to 1.8%. The U.S. election outcome will keep some headline risk on the dollar index for the remainder of the week.
Dollar Index Technical Outlook
The US Dollar index bounced yesterday after a post-election sell-off. The dollar spiked on Wednesday but gave up most of the gains and fell into the weekend with a low near 92.00. The dollar spiked higher yesterday and this could lead to a move towards the 50-day moving average near 93.50. The market should find a new trend with an election confirmation and the 92.00 and 94.50 levels will determine whether it’s a bullish or bearish move. The investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
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Dollar Index Daily Chart
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