The US dollar index (DXY) is hovering near its highest level in 9 months as focus shifts to this week’s virtual Jackson Hole summit. The DXY index is trading at $93.46, which is about 4.5% above the lowest level in June. The dollar has even gained against all key currencies like the euro, sterling, and Swiss franc.
Jackson Hole Summit
This will be a relatively dull week for the US dollar in terms of economic data. Besides, we have already received the latest US employment, inflation, retail sales, and housing numbers. We have also received some hawkish statements from key Federal Reserve officials like Jerome Powell and Mary Daly.
Therefore, the focus this week will be on the Jackson Hole summit that will be held virtually for the first time. In normal times, the Jackson Hole summit is usually held at Wyoming.
It brings together Central Bank governors from some of the most important countries like the US, European Union, Japan, and the UK. In it, they hold speeches and talk about what they plan doing in the near term. Therefore, in most times, the Jackson Hole summit tends to lead to significant moves for currencies like the US dollar.
The Jackson Hole symposium could lead to significant moves on the US dollar index because Fed chair has not talked about tapering of asset purchases recently. He avoided talking about the issue in a town hall that was held last week.
Other key catalysts for the US dollar index this week will be the latest US GDP and PCE data. The GDP data that will come out on Thursday and the PCE data expected on Friday. The GD numbers will not move the DXY index because they are the second estimate.
US dollar index technical forecast
The daily chart shows that the DXY index has formed a W pattern that is shown in black. It is currently trading at the upper side of this pattern. Also, the index has moved above the 25-day and 50-day moving average while the Relative Strength Index (RSI) has been rising. Therefore, it appears like there is a bullish momentum for the US dollar index.
Still, we cannot rule out a situation where the index has a slight pullback this week ahead of the Jackson Hole summit. If this happens, the pullback will be part of a bullish trend.