US Dollar weak, challenges 92.00

The greenback, tracked by the US Dollar Index, stays on the defensive so far this week and is currently threatening to test the critical support at 92.00 the figure.

US Dollar attention to ECB

The index is losing ground since Monday, coming down from last week’s tops in the mid-93.00s following the renewed downtrend in US yields, NK-led geopolitical concerns and US politics.

In fact, yields of the key US 10-year reference managed to leave recent multi-month lows in sub-2.06% levels and are now navigating the vicinity of the 2.10% handle, although the bearish sentiment remains pretty much unchanged.

USD remains weak despite President Trump clinched a deal with Democrats on Wednesday to extend the US debt limit and allow government funding until mid-December.

In addition, the buck should stay under pressure in light of the upcoming ECB meeting. It is worth mentioning that the European currency accounts for more than 55% of DXY. According to market consensus, President Draghi should deliver a somewhat dovish message amidst the recent strong appreciation of EUR, talking down at the same time any possibility of ‘tapering’ the ECB’s QE programme in the very near term future.

Data wise in the US docket, initial claims are next on tap seconded by Q2’s non-farm productivity and unit labor costs, the IBD index and the weekly report on US crude oil inventories by the DoE.

US Dollar relevant levels

As of writing the index is retreating 0.22% at 92.01 and a break below 91.62 (2017 low Aug.29) would target 91.51 (low Jan.15 2015) en route to 87.63 (low Dec.16 2014). On the upside, the next hurdle is located at 92.48 (10-day sma) seconded by 92.96 (21-day sma) and finally 93.35 (high Aug.31).