US Dollar Index debilitates below 92.00, new 2020 lows

• DXY loses further ground and breaches the 92.00 mark.
• The selling mood in the dollar accelerated after Powell’s speech.
• ISM Manufacturing, Markit’s PMI, Fedspeak all due later in the NA session.

The greenback continues to shed ground vs. its main competitors, and it is now dragging the US Dollar Index (DXY) to the sub-92.00 area, recording at the same time fresh yearly lows.

US Dollar Index focused on key data

The index is losing ground for the third consecutive session on turnaround Tuesday, dropping below the 92.00 level and flirting with the May 2018 low in the 91.80 region.

The dollar has accelerated the downside following the speech by Chief J.Powell at the Jackson Hole Symposium last week, where the Fed announced the introduction of the Average Inflation Targeting (AIT).

Collaborating with the downside and from the speculative community, the dollar remains on the negative side and the net shorts climbed to 2-week highs during the week ended on August 25 according to the latest CFTC positioning report.

Later in the session, all the attention will be on the ISM Manufacturing, seconded by the final print of the manufacturing PMI tracked by Markit for the month of August and the speech by FOMC’s L.Brainard (permanent voter, dovish).

What to look for around USD

The index has exacerbated the downside in the first half of the week, as investors keep selling the dollar on the back of the dovish perception seen after Powell’s speech. In the meantime, and looking at the broader picture, investors remain bearish on the dollar against the backdrop of a (more) dovish Fed, the unremitting progress of the coronavirus pandemic, political uncertainty and the massive stimulus package, whereas occasional bouts of US-China tensions could lend some temporary legs to the greenback.

US Dollar Index relevant levels

At the moment, the index is losing 0.24% at 91.93 and faces the next support at 91.78 (2020 low Sep.1) seconded by 89.23 (monthly low April 2018) and then 88.94 (monthly low March 2018). On the upside, a break above 93.47 (weekly high Aug.21) would aim for 93.99 (monthly high Aug.3) and finally 94.20 (38.2% Fibo of the 2017-2018 drop).