Dollar index – bulls hold grip ahead of Powell’s speech in Jackson Hole
The dollar index keeps firm tone and hit the highest since early July in early Friday’s trading, in extension of Thursday’s 0.63% advance (the biggest one day gains since July 27).
The greenback resisted some softer tones from Fed policymakers on Thursday and kept its strong bullish stance against the major world counterparts, on expectations that Fed Chair Powell will reiterate the central bank’s view on keeping high interest rates for extended period.
Recent solid US economic data signal that the economy is relatively resilient and labor sector remains tight that leaves space for keeping high borrowing cost for some time to push still elevated inflation towards the central bank’s target at 2%, without serious negative impact to the economy.
However, traders remain cautious as any softer tones from Powell, which should not be dovish but less hawkish than expected, may sour the sentiment and increase pressure on dollar.
Bulls eye key short-term barrier at 104.59 (May 31 peak) violation of which would unmask next pivotal level at 105.13 (Fibo 38.2% of 114.72/99.20 fall).
Initial support lays at 103.60 (rising 5DMA) followed by 10DMA (103.40), which should ideally keep the downside protected and guard lower pivot at 102.93 (200DMA), loss of which will be bearish.
Res: 104.24; 104.59; 105.13; 105.40
Sup: 103.60; 103.40; 103.18; 102.93