Major Currency Pairs Approach Crucial Levels Ahead of Powell's Speech
Throughout the first half of the week, the US Dollar index maintained relative stability. However, as US economic data began to exhibit signs of decline, the greenback shifted lower.
Wednesday introduced notable volatility to the FX market, primarily triggered by disappointing PMI data in the US. Nevertheless, the dollar's decline was somewhat offset by even weaker PMI data emerging from both the Eurozone and the UK.
Thursday ushered in a more optimistic outlook. Unexpectedly strong unemployment benefit applications, totaling 230K, and a 0.5% increase in core durable goods orders for July provided insights into the economy's resilience. These positive indicators bolstered the dollar's strength.
Now, as the week nears its conclusion, the currency has regained momentum and initiated an ascent in anticipation of a hawkish speech by Jerome Powell at the Jackson Hole Symposium.
Dollar Index Technical Picture
Throughout the week, the DXY (Dollar Index) mainly traded within a tight range of 103.3 to 103.5. However, this range was broken yesterday as the DXY surged into the 104 territory.
This movement, driven by an uptick in demand for the dollar, is advancing toward the peak observed in May. Notably, the index appears poised to breach the descending channel.
Several technical factors support this potential rise. The DXY has been using the 8-day Exponential Moving Average (EMA) as dynamic support, and both the 8-day and 21-day EMA values have crossed above the 3-month EMA value over the past few months. This combination of moving averages suggests that the dollar's strength might persist.
Furthermore, a significant factor influencing the current bullish outlook is the impending speech by Federal Reserve (Fed) President Powell
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