Forex Today: Dollar builds on last week's gains amid hawkish Fed bets

Here is what you need to know on Monday, August 29:

Following FOMC Chairman Jerome Powell's speech at the Jackson Hole Symposium on Friday, the US Dollar Index gathered strength and posted weekly gains. The index started the new week on a firm footing and reached its highest level in two decades near 109.50. The economic docket will not be featuring any high-impact data releases on Monday and the risk perception alongside the market pricing of the Fed's rate outlook could continue to drive the market action. At the time of press, US stock index futures were down between 0.7% and 1.15%.

While delivering his opening remarks on Friday, Powell reiterated that restoring the price stability will likely require maintaining a restrictive policy stance for 'some time.' Regarding the September rate decision, Powell said the size of the rate increase will depend on the totality of the data since the July policy meeting. In turn, the CME Group FedWatch Tool showed that the probability of a 75 basis points (bps) rate hike climbed to 70% from 40% early Friday. 

Over the weekend, European Central Bank policymakers adopted a hawkish tone at the Jackson Hole Symposium but the shared currency failed to start the new week on a bullish note. ECB Governing Council member Francois Villeroy de Galhau noted that ECB needs another significant interest rate hike in September. ECB policymaker Olli Rehn noted the euro's exchange rate was a "significant consideration" when setting up the monetary policy. Finally, ECB Governing Council member Isabel Schnabel argued that they had little choice but to continue the normalization path even if the eurozone were to enter a recession. EUR/USD was last seen losing 0.3% on a daily basis at 0.9935.

During the Asian trading hours on Monday, the data from Australia showed that Retail Sales rose by 1.3% on a monthly basis in July, surpassing the market expectation for an increase of 0.3%. The AUD/USD pair struggled to benefit from the upbeat data and declined toward 0.6850.

Fueled by rising US Treasury bond yields, USD/JPY touched its highest level in over a month at 139.00 early Monday. The benchmark 10-year US Treasury bond yield was last seen rising 2.3% on the day at 3.11%.

Gold stays under heavy bearish pressure in the early European morning and pushes lower toward $1,720 on Monday. 

Following Friday's selloff, Bitcoin stayed under bearish pressure over the weekend and dropped below $20,000. Although BTC/USD staged a rebound early Monday, it continues to trade below $20,000. After having lost more than 10% on Friday, Ethereum extended its slide and touched its lowest level in a month at around $1,400 on Sunday. ETH/USD is edging higher in the European morning while trading below $1,500.