The dollar index remains constructive and extends recovery on Thursday, with hotter than expected US inflation (PCE Index) in July, reviving expectations for Fed’s more hawkish stance and offering fresh support to the greenback.
Wednesday’s break and close above 200 DMA (98.99) generated initial positive signal, which requires more upside action (break of cracked Fibo 23.6% at 99.16) to be confirmed and open way towards pivotal barriers at 99.50/65 zone (100DMA / Fibo 38.2% of 101.48/98.44 / daily cloud base), violation of which to strengthen near-term structure.
Technical picture on daily chart is still bearishly aligned (14-d momentum below the centreline / multiple bear-crosses) that keeps the downside vulnerable, while fundamentals may be more supportive of the dollar.
Elevated inflation and the US economy remaining in better condition than other major economies, suggest that the Fed may keep restrictive monetary policy for some time (wide expectations for unchanged rates in September and growing bets for 25 basis points hike in December).
Markets await the speech of Fed Chief Warsh in his debut at Jackson Hole Symposium, which would provide more details on the central bank’s monetary policy path.
Res: 99.37; 99.52; 99.65; 100.00
Sup: 98.99; 98.75; 98.57; 98.44
 in July, reviving expectations...){kind=link}