The US Dollar Index is enduring a 2nd straight day of losses, which have checkmated any attempts to interrupt three days of gains. These gains came on the back of half-hearted US Dollar strength noticed in the first three days of the week. However, full risk-on status has taken control of the market once more, creating further selling bias on the US Dollar. Today’s risk on status came to light as US initial jobless claims dropped below the 1 million mark for the first time since March. Initial Jobless Claims fell from 1191K last week to 963K; a figure which beat the consensus number of 1120K.
The drop in the first-time unemployment benefit applications, coupled with increasing uncertainty about the renewal of the stimulus packages to households and smallholder companies is driving fund flows out of the greenback. This has ensured that the USD Index, which tracks the performance of the US Dollar against a host of other currencies, continued to face downside pressure heading into the end of the trading week. The index briefly breached the 93.00 level, posting an intraday low of 92.93 before posting a recovery that sent the DXY to the 93.25 price level.
The US Dollar Index remains on the back foot and is poised to challenge the support at 93.17. A breakdown of this support level opens the door once more for the DXY to push towards 92.50, a price level which has so far remained resolute. This price remains the floor to break for sellers. If sellers succeed in breaking down this floor, then 91.91 becomes the next target.
Conversely, a bounce on the 93.17 support could provide a boost that allows the index to aim for 93.80. 94.62 and 95.03 are also in the running as upside targets, as are 95.19 and 95.72. However, the latter two targets require a major fundamental shift in the US Dollar sentiment to have a chance of being actualized.
