US Dollar Index loses momentum near 92.40 on data, Powell
- DXY clinches fresh daily lows in the 92.45/40 band.
- Initial Claims rose more than forecasted during last week.
- Fed’s Powell speaks at the Jackson Hole Symposium.
The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, is losing further momentum and tests weekly lows near the 92.40 level.
US Dollar Index offered on Powell
The index debilitates further and drops to multi-day lows in the 92.40 area following the speech by Fed’s Jerome Powell and mixed results from the US docket.
The dollar is grinding lower after Chief Jerome Powell reiterated at Jackson Hole the Fed’s commitment to use all available tools in order to achieve maximum employment and price stability.
Powell also said that the Fed will target 2% inflation on average (despite not giving any hint on a particular method to calculate it), although the emphasis is now on pursuing maximum employment. Still on inflation, Powell noted the Fed will act if consumer prices rise above the target.
In the docket, weekly Initial Claims rose by 1.006 million and the second estimates of US GDP showed the economy is seen contracting 31.7% during the April-June period, a tad above expectations.
What to look for around USD
The index trades on a choppy fashion so far this week, managing to stabilize somewhat around the 93.00 neighbourhood. In the meantime, and looking at the broader picture, investors remain bearish on the dollar against the usual backdrop of a 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. Supporting the negative stance on the dollar, the speculative community remained clearly biased towards the bearish side during the past week.
US Dollar Index relevant levels
At the moment, the index is losing 0.39% at 92.51and faces the next support at 92.13 (2020 low Aug.18) seconded by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.80 (monthly low May 2018). On the upside, a breakout of 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).
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
