US Dollar Index flirts with daily highs near 93.80 ahead of Powell

• DXY remains bid and advances to the 93.70/80 band.
• Existing Home Sales, Richmond Fed index, Evans next in the docket.
• Chief J.Powell will testify on the Fed’s response to the pandemic.

The greenback is extending the upside momentum and pushes the US Dollar Index (DXY) to the area of 93.80, or daily highs.

US Dollar Index now looks to Powell

The index advances for the third consecutive session at the beginning of the week and extends the positive note to the vicinity of 93.80, where also lies the 55-day SMA.

In fact, the renewed sentiment towards the risk aversion has been lending extra legs to the dollar in past sessions. This investors’ move away from the risk complex has met support in the unabated advance of the coronavirus pandemic across the world as well as persistent uncertainty surrounding a potential US stimulus package.

Later in the session, all the attention will be on the first testimony by Fed’s Jerome Powell, this time before the House Financial Services Committee and on the Fed’s Pandemic Response.

In the US data space, Existing Home Sales for the month of August, the speech by Chicago Fed C.Evans (2021 voter, centrist) and September’s Richmond Fed Index are all due later in the NA session.

What to look for around USD

The dollar keeps the bid bias in the first half of the week and extends the rally further north of the 93.00 yardstick. The ongoing bullish move in DXY is (still) seen as temporary, however, as the underlying sentiment towards the greenback remains on the negative side. This view is reinforced by the “lower for longer” stance from the Federal Reserve, the ongoing recovery in the global economy, the negative position in the speculative community and political uncertainty ahead of the November elections.

US Dollar Index relevant levels

At the moment, the index is gaining 0.17% at 93.70 and a break above 93.78 (monthly high Sep.21) would open the door to 93.99 (monthly high Aug.3) and finally 94.20 (38.2% Fibo of the 2017-2018 drop). On the other hand, the next support emerges at 92.70 (weekly low Sep.10) seconded by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.75 (2020 low Sep.1).