- DXY meets support in the 93.20/15 band post-FOMC.
- The Fed kept the FFTR unchanged at its meeting on Wednesday.
- Weekly Claims and high level Q2 GDP figures next of relevance.
The greenback, when tracked by the US Dollar Index (DXY), is recovering some ground lost after bottoming out in the 93.20/15 band plus it manages to post decent gains in the 93.60 region on Thursday.
US Dollar Index bid before key data
Following the drop to levels last seen in May 2018 in the 93.20/15 band, the index appears to have regained some composure and it is now navigating the mid-93.00s as market participants carry on to consume the latest FOMC event and shift their focus to the upcoming key data releases.
In fact, the Federal Reserve left the Fed Funds Target Range (FFTR) unchanged as broadly expected on Wednesday. The Committee noted the improvement in the economic activity recently, although it acknowledged that those levels still remain well below pre-coronavirus levels. The Fed also reiterated its commitment to use “its full range of tools” when comes to support the economy. In addition, the Fed made no changes to the QE programme and extended to December 31 its lending facilities directed at counteracting the impact of the pandemic on the economy.
In the US data space, the weekly Initial Claims will undoubtedly be once again at the heart of the debate combined with the preliminary reading of the GDP for the April-June period.
What to try to find around USD
The dollar remains under heavy pressure despite the ongoing rebound, as investors keep carefully the bearish stance on the currency unchanged against the usual backdrop of US-China geopolitical jitters, the spread of the pandemic and efforts to reunite to a somewhat normal economic activity. Also weighing on the buck, market participants seem to have shifted their preference for other safe havens rather than the greenback on occasional bouts of risk aversion. On another front, the speculative community kept adding to the offered note round the dollar for yet another week, opening the doorway to a potential development of a far more serious bearish trend in the dollar.
US Dollar Index relevant levels
At the minute, the index is gaining 0.26% at 93.50 and a break above 94.20 (38.2% Fibo of the 2017-2018 drop) would open the doorway to 96.03 (50% Fibo of the 2017-2018 drop) and lastly 96.98 (55-day SMA). On one other hand, the following down barrier lines up at 93.18 (2020 low Jul.29) seconded by 91.80 (monthly low May 18) and lastly 89.23 (monthly low April 2018).