US Dollar Index tests the breakout of 110.20-110.30 range, Fed Powell’s speech eyed

The US dollar index (DXY) aims to recapture a two-decade high at 110.55 in the Asian session. The asset has tested the upside break of the consolidation formed in a narrow range of 110.18-110.29 and has resumed its upside journey. On Tuesday, the DXY extended its gains after overstepping the critical hurdle of 110.27. The asset picked significant bids after the release of upbeat US ISM Services PMI data.

US ISM Services PMI advanced surprisingly

The Non-Manufacturing ISM data landed at 56.9, higher than the estimates and the prior release of 55.1 and 56.7, respectively. A surprising improvement in the Services PMI strengthened the mighty US dollar index (DXY) and printed a fresh two-decade high at 110.55. US tech biggies in their earnings call announced a short-term halt in the recruitment process as companies were expecting a slowdown ahead, however, a higher-than-expected improvement in Services PMI shored up the DXY’s appeal.

Fed Powell to sound hawkish

US economic indicators are delighting the Federal Reserve (Fed) and are providing them room for escalating the interest rates further. Employment generation has remained upbeat, ISM Manufacturing PMI landed stable, and ISM Services PMI recorded higher surprisingly. As the US economic data is displaying a stellar performance, the Fed has the luxury to sound hawkish and discuss 75 basis points (bps) interest rate hike in his speech on Thursday. Apart from that, soaring odds of a recession in the UK economy and eurozone are forcing investors to channel their funds into the DXY.