The USD index (DXY) is hovering just below its yearly highs while USD/JPY broke the downtrend from the July swing highs. Fed Chair Jerome Powell’s Jackson Hole speech will likely catalyze a more significant move in the major USD-pairs.
meeting, which inspired market participants to believe that we’ve moved beyond peak Fed rate hike odds amidst a slowing US economy.
That said, with Fed rate hike odds for the September FOMC meeting sitting right at 50% for a 75-bps rate hike, Fed Chair Powell’s speech is likely to spark a significant move across all asset classes. What will Fed Chair Powell likely say? if the US economy is in a recession, it won’t stop the Fed from raising rates further to fight inflation; the outcome of the September FOMC meeting – either a 50-bps or 75-bps rate hike – will be contingent upon how US data evolves over the coming weeks.
The shakeout in price action may mean volatility, but no discernible new directional bias in the major USD-pairs.The DXY Index rallied back towards its yearly highs this week before pausing. Consolidating into an ascending triangle, the dollar gauge retains its potential for a bullish breakout to fresh yearly highs. The momentum structure remains bullish, with the DXY Index above its daily 5-, 8-, 13-, and 21-EMA envelope, which remains in bullish sequential order.
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