USD Index Breaks Below 106.00 To Clinch New Multi-Session Lows

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  • The index adds to the weekly pullback and breaches 106.00.
  • US markets will be closed due to the Thanksgiving Day holiday.
  • The dollar remains depressed following FOMC Minutes.

The greenback loses ground for the third session in a row and breaks below the 106.00 support when gauged by the USD Index (DXY).

USD Index looks offered post-Minutes

The index trades in multi-day lows in the sub-106.00 zone amidst the tenacious improvement in the risk-associated universe and already approaches the November low near 105.30, just ahead of the critical 200-day SMA, today at 105.27.

In the meantime, the dollar remains offered in the current post-FOMC Minutes context, where participants agreed that a slower pace of future interest rate hikes could be appropriate to better assess the progress of the ongoing normalization of the Fed’s monetary conditions.

It is worth recalling, however, that FOMC members still see the ultimate level of the interest rates as higher than previously thought.

What to look for around USD

The dollar extends the pronounced drop from Monday’s peaks around the 108.00 barrier and already trades in the area below the 106.00 yardstick pari passu with the persistent recovery in the risk-linked galaxy.

While hawkish Fedspeak maintains the Fed’s pivot narrative in the freezer, upcoming results in US fundamentals would likely play a key role in determining the chances of a slower pace of the Fed’s normalization process in the short term.

Key events in the US this week: Thanksgiving Day holiday (Thursday).

Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Prospects for further rate hikes by the Federal Reserve vs. speculation of a recession in the next months. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China persistent trade conflict.

USD Index relevant levels

Now, the index is retreating 0.15% at 105.94 and the breakdown of 105.34 (monthly low November 15) would open the door to 105.27 (200-day SMA) and finally 104.63 (monthly low August 10). On the other hand, the next-up barrier comes at 107.99 (weekly high November 21) followed by 109.16 (100-day SMA) and then 110.55 (55-day SMA).

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