US dollar index
The dollar index continues its descent and the greenback is now testing the 92.00 support level which halted the decline into September. If the USD cannot find buyers here then there is a risk of further steep losses.
Yesterday saw investors looking at a more peaceful transition in the U.S. election. The likelihood of a Biden Presidency has the dollar on the backfoot due to the expectations for increased spending and less U.S. dominance in trade negotiations. This dynamic was helped by the pick of former Fed Chair Janet Yellen as Biden’s Treasury Secretary. The move will ensure a dovish approach to the economy and a continuation of the current monetary policies which have pressured the dollar this year.
Today has the potential for volatility in the dollar with a set of high-profile indicators due out in the afternoon session. Durable goods orders are out first, followed by PCE inflation figures, third-quarter GDP, and Michigan consumer sentiment. These will precede the release of FOMC minutes which are unlikely to see much volatility due to the Fed’s strategy being secured for the near-term.
The dollar index was unable to get above the 92.50 level and this saw a bearish close. The inevitable next target was 92.00 and the USD will try to find support here or there is a threat of further losses. Traders should await a close below 92.00 for short positions. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
