The U.S. Dollar Index declined as investors continued to focus on the economic talks between the White House and Pelosi.
Analysts believe that the deal is not possible before the upcoming elections.
The index is expected to react to data on the start of construction and the start of construction in the U.S. later today.
The U.S. Dollar Index (DXY) is slightly down as the number of Covid 19 cases continues to rise and the White House and Democrats continue to talk about stimulus measures. The index is trading at 93.40, which is above yesterday’s low of $93.20.
Dollar Index (DXY) falls
Remain doubts about stimuli
The USA urgently needs a further stimulus as the number of Covid-19 cases continues to rise. Yesterday the number increased by more than 47,000, bringing the total number of confirmed cases to more than 8.1 million. More than 220,000 people have died of the disease and experts expect the situation to worsen before the cold season starts.
Consequently, economists and other analysts believe that the U.S. urgently needs another stimulus package. Indeed, in its interest rate decision and in later speeches by officials, the Fed insisted that the package was necessary to support job creation.
However, these hopes have faded, even as the White House and Nancy Pelosi continue to talk about an agreement. The White House has proposed a $1.8 trillion spending package, while Nancy Pelosi has proposed $2.2 trillion. The two proposals provide for the $1,200 checks to go to families, strengthen the paycheck protection program and provide financial support to airlines.
An agreement between the two sides is possible, but there is no chance that the Senate will vote for it. According to CNN, most Republicans in the Senate warn that they will not vote for an agreement that exceeds $500 billion. Indeed, the Senate will vote for its stimulus bills today and tomorrow.
Without stimulus, many businesses, especially small and medium sized ones, will continue to struggle. For example, the airlines have warned that they will lay off thousands of employees, and the number of bankruptcies has continued to rise. Recent data also indicates that most companies that have closed will not reopen. The data also shows that unemployment rates remain high, while consumer spending has declined.
Later today, the Dollar Index will react to the numbers of building permits and construction starts in the United States. Analysts surveyed by Reuters expect the data to show that permits rose from 1.47 million to 1.52 million in September. They also see the number of new construction starts rise from 1.41 million to 1.45 million.
Technical outlook for the US Dollar Index
Technical table of the US Dollar Index
The four-hour chart shows that the dollar index is floating between the $93.00 and $93.90 channels. The price is slightly below the 15-day and 25-day exponential moving averages. It is also between the 38.2% and 50% Fibonacci retracement levels. The index is also slightly above the descending white trend line that connects the highest points in September. Therefore, I suspect that the price will continue to fall as bears target the next support level at $93.00. Start your trading journey with our free Forex trading courses….