- DXY hits new daily lows in the 92.45 / 40 band.
- Initial requests increased more than expected last week.
- Fed’s Powell speaks at the Jackson Hole Symposium.
the US dollar index (DXY), which values the greenback vs. a basket of its main rivals, is still losing momentum and testing weekly lows near the 92.40 level.
U.S. dollar index offered on Powell
The index weakens further and falls to multi-day lows in the 92.40 area after Jerome Powell’s Fed speech and mixed results from the US ledger.
The dollar is falling after Chief Jerome Powell reiterated in Jackson Hole the Fed’s commitment to use all available tools to achieve maximum employment and price stability.
Powell also said the Fed will aim for inflation of 2% on average (although it gives no indication of a particular method to calculate it), although the focus is now on finding maximum employment. Still on inflation, Powell noted that the Fed would act if consumer prices rose above target.
In the register, the initial weekly claims rose by 1.006 million and the second US GDP estimate showed that the economy would contract by 31.7% during the April-June period, slightly above expectations.
What to look for around USD
The index has been trading choppy so far this week, managing to stabilize somewhat around the 93.00 neighborhood. In the meantime, and looking at the bigger picture, investors remain bearish on the dollar amid the usual backdrop of an accommodating Fed, relentless progress from the coronavirus pandemic, political uncertainty and the massive stimulus package, while occasional bouts of US-China tensions could lend some temporary legs to the greenback. Supporting the negative position on the dollar, the speculative community has remained clearly biased towards the bearish side over the past week.
Relevant levels of the US dollar index
For now, the index loses 0.39% to 92.51 and faces the next support at 92.13 (August 18, 2020 low) seconded by 91.92 (23.6% Fibo from the 2017 decline -2018) then 91.80 (monthly low of May 2018). On the upside, a breakout of 93.47 (August 21 weekly high) would target 93.99 (August 3 monthly high) and finally 94.20 (38.2% Fibo of 2017-2018 decline).