DXY inter-markets: next stop at 93.00?

The USD Index, which measures the greenback vs. its main competitors, is prolonging its decline during the first half of the week, currently putting the key support at 95.00 the figure to the test.

Increasing demand for JPY after the Japanese Government has once again disappointed markets today has given extra downside impetus to USD/JPY, in turn adding to the unwinding of USD-longs and collaborating with the downside.

Volatility gauged by VIX remains in session highs, adding bids to JPY while US yields remain in the positive territory, somewhat limiting the USD-downside, or at least mitigating it.

All in all (and when the dust settles in Japan), markets should re-focus on the upcoming US labour market data as near-term drivers for the dollar, with the ADP report due on Wednesday ahead of the key Non-farm Payrolls on Friday. In the meantime, the 94.00/93.90 area should offer quite decent support, where is currently located a retracement of the June-July up move and the uptrend off 2016 lows at 91.88 (May 3). A breakdown of this area should allow a potential visit to 93.03 (pre-Brexit low).