US Dollar Index struggles for direction around 92.30 ahead of FOMC

• DXY is down smalls near the 92.30 level on Wednesday.
• US politics, the progress of the pandemic remains in centre stage.
• FOMC Minutes will be the main event later in the NA session.

The greenback is trading slightly on the defensive and just above recent 2020 lows when gauged by the US Dollar Index (DXY) on Wednesday.

US Dollar Index cautious ahead of FOMC

After recording lows in the proximity of 92.10 on Tuesday – levels last seen in May 2018 – the index is now navigating within a cautious range ahead of the key publication of the FOMC minutes of the latest meeting.

In the meantime, there are no changes in the broad macro view around the buck, where the US political scenario stays in the centre of the debate amidst the increasing uncertainty surrounding another fiscal stimulus bill and following the official nomination of Joe Biden as the presidential candidate for the Democrat party.

Later in the session, MBA’s Mortgage Applications is due in the first turn seconded by the weekly report on US crude oil inventories by the EIA, all ahead of the release of the FOMC minutes.

What to look for around USD

The index remains on the defensive in the vicinity of the 92.00 mark, navigating the area last visited more than two years ago. In the meantime,  and looking at the broader picture, investors remain bearish on the dollar against the usual backdrop of a dovish Fed, the unremitting progress of the coronavirus pandemic, political uncertainty and the massive stimulus package, whereas persistent US-China effervescence could lend some occasional legs to the greenback. Supporting the negative stance on the dollar, the speculative community remained clearly biased towards the bearish side during the past week

US Dollar Index relevant levels

At the moment, the index is losing 0.02% at 92.29 and faces the next support at 92.13 (2020 low Aug.18) seconded by 91.92 (23.6% Fibo of the 2017-2018 drop) and finally 91.80 (monthly low May 18). On the flip side, a break above 93.99 (weekly high Aug.3) would aim for 94.20 (38.2% Fibo of the 2017-2018 drop) and then 96.03 (50% Fibo of the 2017-2018 drop).