USD Index climbs to fresh two-month highs past 104.00 ahead of Powell

• The index surpasses the 104.00 hurdle to print new highs.
• Chair Powell will speak later at the Jackson Hole Symposium.
• Final Michigan Consumer Sentiment takes centre stage in the US docket.

The greenback gathers extra steam and surpasses the 104.00 barrier to print new multi-week peaks when tracked by the USD Index (DXY) at the end of the week.

USD Index looks at Powell, data

The index adds to Thursday’s gains and surpasses the 104.00 hurdle for the first time since early June amidst rising cautiousness ahead of the speech by Chief J. Powell at the Jackson Hole Symposium later in the European afternoon.

The move higher in the dollar also appears bolstered by the equally robust performance of US yields across different maturities, which at the same time look supported by rising speculation that the Fed might hike rates at some point by year end.

Other that Powell’s speech, the US calendar will show the final print of the Michigan Consumer Sentiment for the current month.

What to look for around USD

The index picks up pace and trespasses the 104.00 hurdle helped by renewed market chatter pointing to a potential extra hike by the Fed in the latter part of the year.

In the meantime, support for the dollar keeps coming from the good health of the US economy, which seems to have reignited the narrative around the tighter-for-longer stance from the Federal Reserve.

Furthermore, the idea that the dollar could face headwinds in response to the data-dependent stance from the Fed against the current backdrop of persistent disinflation and cooling of the labour market appears to be losing traction as of late.

Key events in the US this week: Jackson Hole Symposium, Final Michigan Consumer Sentiment, Chief Powell (Friday).

Eminent issues on the back boiler: Persistent debate over a soft or hard landing for the US economy. Incipient speculation of rate cuts in early 2024. Geopolitical effervescence vs. Russia and China.

USD Index relevant levels

Now, the index is up 0.16% at 104.15 and the breakout of 104.27 (monthly high August 25) would open the door to 104.69 (monthly high May 31) and finally 105.88 (2023 high March 8). On the opposite side, immediate support appears at 103.12 (200-day SMA) followed by 102.32 (55-day SMA) and then 101.74 (monthly low August 4).