Price action on the US Dollar index was mildly lower this Wednesday after hopes of a US government additional stimulus package dimmed. The abrupt cancellation of stimulus talks with Democrats by US President Donald Trump and the comments by the US Fed Chair has brought on mild risk-on sentiment this Wednesday.
InvestingCube's S&R Levels
Not in Sell Zone
As the coronavirus keeps raging, the US President Trump left the Walter Reed Medical Center on Monday but continues treatment at the White House. Still, several key members of his staff and campaign big-wigs are all down with the coronavirus.
Stimulus talks are not expected to resume until after the November 3 election. Comments by the Fed Chair and the ECB President are also heightening risk-off sentiment on the day. Fed Chair Jerome Powell warned of an impending slip into a downward spiral if little action was taken to control the coronavirus and to provide economic support. The ECB President also hinted that the coronavirus was delaying the EU’s economic recovery.
The USD Index is trading at 93.67, or 0.19% lower.
Technical Outlook for USD Index
After hitting highs of 94.62 last week on recovering USD sentiment, the USD index has started off the week on a dour note. Price action hit resistance at 93.80 yesterday, prompting sellers to initiate a pullback from that rejection. If prices continue to decline, then the support at 93.17 becomes the initial resistance, with 92.50 and 91.91 once more coming into the picture as potential support targets. However, the previous neckline of the previous head and shoulders pattern could be a limiting factor to the full actualization of this move.
On the flip side, a bounce on this neckline or the adjoining support at 93.17 could allow the DXY make a move to retest the 93.80 resistance, with 94.62 presenting itself once more as a resistance target.