The US Dollar Index (DXY) has been able to stall the decline below 92.00, but bearish pressure persists as the greenback trades at 2-month lows on the day.
At the moment, US election uncertainty seems to have eased, and this is promoting risky sentiment that is depressing the US Dollar. But this is not the case this Monday as sellers on the US Dollar index appear to have taken a hiatus, allowing for a modest 0.09% gain as at the time of writing.
Presently, we have a situation where Joe Biden has been called the 46th US President by the press, which seems to have eased uncertainty surrounding the election outcome. With Biden in charge and the House expected to retain its majority, this could make the passing of additional coronavirus stimulus easier. A combination of both factors is a USD-negative effect.
However, the situation remains precarious, and with incumbent President Donald Trump set to mount a series of legal challenges starting this week, the status could change at any time.
Technical Outlook for USD Index
The breakdown of the 93.173 support also invalidated the rounding bottom pattern. The USD index remains in vulnerable territory as today’s move represents a pullback which has met resistance at the 92.50 level. Suppose today’s candle closes below this resistance level; this could confirm the breakdown of the 92.50 support and promote a cascading of the US Dollar Index towards the 91.906 support, assuming sellers can overcome the 92.00 psychological area.
On the other hand, if we see significant headway in the legal challenges to be mounted by the Republicans before the ratification of the US election results by the electors in December, there is a chance of safe-haven flows into the USD allowing the DXY to break above 92.50. If this happens, then we could see a push towards 93.173 and possibly 93.805.
This week could prove to be a pivotal one for the USD index, and the situation remains fluid.