U.S. Dollar (DXY) Gains Some Ground Ahead Of Jackson Hole Symposium

Key Insights

• EUR/USD managed to find support near the 0.9900 level. 
• USD/JPY moved back above the 137.00 in absence of positive catalysts for the Japanese yen. 
• Commodity-related currencies pulled back after yesterday’s rebound. 

DXY Faced Strong Resistance Near The 109 Level

U.S. Dollar Index has been volatile today as traders positioned themselves ahead of the Jackson Hole Symposium, which will start tomorrow.

Today, the U.S. released Durable Goods Orders and Pending Homes Sales reports, which had minimal impact on currency dynamics as traders remained focused on the upcoming event in Jackson Hole.

Treasury yields continued to move higher, providing support to the American currency. DXY made an attempt to settle above the 109 level but faced strong resistance and pulled back.

At this point, it looks that DXY will not be able to get above yearly highs at 109.30 before Fed Chair Jerome Powell speaks on Friday as bulls are worried that he will not be hawkish enough to provide additional support to the American currency.

EUR/USD Rebounds From Lows

EUR/USD made an attempt to get to the test of the 0.9900 level but lost momentum and rebounded above 0.9950.

As usual, traders were focused on the situation in European natural gas markets, which tested new highs today.

The bearish trend remains strong, but traders will stay cautious ahead of Powell’s comments. DXY is close to yearly highs, so any comment that can be interpreted as dovish may push EUR/USD back above the 1.0000 level.

Meanwhile, GBP/USD made an attempt to settle below 1.1750 but failed to develop sufficient downside momentum.

From a big picture point of view, GBP/USD is trading in a wide 1.1720 – 1.1880 range. GBP/USD easily moves between levels inside this range, so traders should be prepared for fast moves.

Japanese Yen Is Losing Ground Against U.S. Dollar

USD/JPY moved higher after yesterday’s pullback and managed to get back above the 137.00 level.

The BoJ is expected to remain dovish, so it’s hard to find catalysts that could support the Japanese yen against the U.S. dollar.

At this point, it looks that USD/JPY will not move lower without a strong downside move in DXY.

Commodity-Related Currencies Pull Back After Yesterday’s Rally

AUD/USD and NZD/USD failed to gain additional upside momentum after yesterday’s rebound. Meanwhile, USD/CAD moved closer to the 1.3000 level, as the Canadian dollar found itself under pressure against the U.S. dollar.

Traders focused on general market sentiment and dynamics of commodity markets in absence of notable economic reports in Australia, New Zealand, and Canada. Most likely, trading in commodity-related currencies will stay choppy ahead of the main event of the week in Jackson Hole.

For a look at all of today’s economic events, check out our economic calendar.