US Dollar Index Bounces Back Above 93.00 – Is a New Trend Underway?
The US Dollar index has rebounded back above the 93.00 support level as the greenback sees virus safe haven flows ahead of big economic data on Thursday. The dollar failed at resistance above this level as the stimulus talks were revived but these have stalled again.
The USD is seeing safe haven flows as the world gets gripped by another surge in virus cases, particularly in Europe, where Brussels is considering enforcing EU-wide lockdown measures. German Chancellor Angela Merkel has already confirmed that the country will join France in another lockdown “light”. President Macron has enforced a “stay-at-home” order for the weekend.
Stimulus talks in the U.S. have stalled again with both parties accusing the other of “moving the goalposts,” but a deal is highly unlikely before the election. It was noted by a member of Congress this week that a deal would have to wait until February if it misses the election deadline. Added to that, we saw Canada announce new stimulus measures in the Bank of Canada’s rate announcement, while Europe will undoubtedly see further stimulus due to the surge in virus cases and move towards new lockdowns.
Tomorrow is a big day for the DXY as we get the latest interest rate announcement and statement from the European Central Bank, while traders will get an advance look at U.S. third-quarter GDP, where a big reading of 31% is expected. After losing 31.4% and 5% in the last two quarters, this will still see the U.S economy at a loss for the year. Despite this, the number will move the dollar index and has importance ahead of the election.
US Dollar Index Technical Outlook
The dollar index has found support below the 93.00 level and has bounced back above that level. This sets the USD up for another run at the 93.82 level with the 94.62 resistance being the ultimate target. Bullish traders could place a stop below today’s open. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.