Fed Chairman Jerome Powell confirmed the Federal Reserve's readiness to continue tightening monetary policy, which fueled market expectations for another interest rate hike closer to the end of the year.
The dollar maintains a positive momentum after Powell's speech at the Jackson Hole symposium. The DXY index broke the 104.00 mark last week and reached a 5-month high at 104.38.
From a technical perspective, the dollar index DXY (CFD #USDX in the MT4 terminal) has broken into the medium-term bullish market zone, above key levels of 103.16 (200 EMA on the daily chart) and 103.52 (upper boundary of the downward channel on the weekly chart). It continues its upward momentum, moving towards the recent (May) local high of 104.65.
Breaking past recent local highs of 104.28, 104.42, and the May peak of 104.65 might serve as a signal to increase long positions, anticipating a rise to the March peak at 105.85.
In an alternative scenario and after breaking below 103.95 (today's low and the 200 EMA on the 15-minute chart), DXY will aim for the crucial short-term support level at 103.52 (200 EMA on the 1-hour chart), aiming for further corrective decline at the key support level of 103.16 (200 EMA on the daily chart).
Breaking below the medium-term support level of 102.70 (50 EMA on the daily chart) will signal a resumption of the DXY's downward momentum.
Downward targets are set at key support levels: 100.90 (144 EMA on the weekly chart) and 100.00. Breaking the key support level of 99.75 (200 EMA on the weekly chart) will push the DXY into the long-term bearish market zone.
Support Levels: 104.00, 103.95, 103.52, 103.16, 103.00, 102.70, 102.00, 101.00, 100.90, 100.00, 99.75
Resistance Levels: 104.28, 104.42, 104.65, 105.00, 105.85.