US Dollar Index fades the uptick to 98.40, looks to Powell

• DXY moves to highs near 98.40 and drops afterwards.
• Yields of the US 10-year note advance to weekly high above 1.62%.
• Initial Claims rose by 209K WoW, flash PMIs come in later.

After testing fresh highs near 98.40, the US Dollar Index (DXY) came under moderate selling pressure and it is now navigating the 98.20/15 band, turning negative for the day.

US Dollar Index looks to data, Powell

The index met extra support following the publication of the FOMC minutes late on Wednesday. However, the up move run out of steam in the area of weekly tops around 98.40, sparking the ongoing correction lower.

The knee-jerk to the 98.20 area came in tandem with the rebound of yields of the key US 10-year benchmark to weekly highs in the 1.62% region, all following a better tone in the risk-associated space in response to some Brexit headlines after Merkel-Johnson meeting.

In the data space, Initial Claims rose by 209K WoW, taking the 4-Week Average to 214.50K from 214.00K. Later, Markit will publish its advanced gauges of the services and manufacturing PMIs for the current month.

On another direction, all the attention in the next couple of days should be on the Jackson Hole Symposium and the speech by Fed’s J.Powell.

What to look for around USD

The main focus this week will be on the Jackson Hole Symposium as well as on any hint on the Fed’s plan for the next months regarding interest rates and the outlook of the US economy. In the meantime, trade concerns, while still unabated and in combination with the inversion of the yield curve, carry the potential to spark further ‘insurance cuts’ by the Federal Reserve and thus undermine the constructive prospects of the buck in the next months. Opposed to this view emerges the Greenback’s safe have appeal, the status of ‘global reserve currency’, so far solid US fundamentals vs. overseas economies and the less dovish stance from the Federal Reserve (as per the latest FOMC event).

US Dollar Index relevant levels

At the moment, the pair is losing 0.08% at 98.18 and a break below 97.95 (low Aug.21) would aim for 97.21 (low Aug.6) and then 96.99 (200-day SMA). On the upside, the initial hurdle lines up at 98.45 (high Aug.20) followed by 98.93 (2019 high Aug.1) and the 99.89 (monthly high May 2017).