On Monday, we:
→ noted that the US Dollar Index (DXY) was consolidating at the start of a week packed with key events;
→ outlined a descending channel (shown in red);
→ highlighted that the price was trading around the channel’s median line, signalling a balanced market;
→ suggested that a test of one of the quarter lines (QL or QH), which divide the channel into four parts, could take place.

As the DXY chart indicates, since then the balance has shifted in favour of buyers, with the price forming an upward trajectory (shown in purple lines) and breaking through short-term resistance R (which has now turned into support, as marked by the blue arrow). Support line S remains relevant.

Today brings the key event that may have the greatest impact on the US Dollar Index (DXY) this week – Jerome Powell’s speech at the annual Jackson Hole Symposium.

This appearance is particularly significant because:
→ it is likely to be Powell’s last speech after seven years as Fed Chair, with his term expiring in May amid ongoing tensions with President Trump;
→ market participants will closely monitor the tone of his remarks, as a rate cut is expected in September, while recent economic data – namely the rise in the Producer Price Index – suggest that the US economy could face renewed inflationary pressures due to Trump’s tariffs.

Technical analysis of the DXY chart

From a bullish perspective, in the short term the US dollar is advancing within the purple channel, supported by:
→ the lower boundary of this channel;
→ the demand imbalance zone in favour of buyers (shown in green), confirmed by yesterday’s sharp bullish candle.

From a bearish perspective:
→ the RSI has entered overbought territory;
→ bullish momentum may fade after a breakout above the QH line;
→ a key resistance at the 99 level lies nearby – a level that reclaimed its role as resistance at the beginning of August (indicated by black arrows).

A corrective pullback in the US Dollar Index (DXY) could happen after its rally to the highest level since 6 August. However, the further trajectory will largely depend on Powell’s words this evening. According to Forex Factory, the speech is scheduled for 17:00 GMT+3.

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