Fundamental Analysis:

  • Key recent events that have impacted the U.S. Dollar Index.
  • What are the major economic data points for the U.S. Dollar?

Technical Analysis:

  • What is the current trend of the U.S. Dollar Index?
  • What are the conditions for a trend reversal?
  • What is the next target for the U.S. Dollar Index?


Fundamental Analysis

 The Federal Reserve Chairman announced at the end of last week, on Friday, August 23, during the Jackson Hole Conference, the end of monetary tightening and the start of interest rate cuts in the September meeting. This marks the first rate cut since the beginning of the tightening campaign to combat inflation. This statement had a negative impact on the U.S. Dollar Index, which declined by approximately 0.80% to reach the level of 100.495. 

The Jackson Hole Conference concluded with significant anticipation for the upcoming U.S. inflation and employment data, as their results will play a major role in the Federal Reserve's upcoming decision on interest rate cuts, with expectations of a reduction by either 50 basis points or 25 basis points.

Traders should monitor U.S. inflation data to see whether it will continue to decline and indicate stability, or if we might see a surprise increase above the 3% rate. Regarding inflation data, attention is focused on the Federal Reserve's preferred inflation indicator, the Core Personal Consumption Expenditures (PCE) Index on a monthly basis, which will be released tomorrow, Friday, August 30, with expectations of remaining steady at 0.2% without any change. Additionally, employment data for August will be released on Friday, September 6.


Technical Analysis

 

Figure 1: Dollars Index, H4,MT5

The U.S. Dollar Index is trading in a general downward trend as markets price in the anticipated interest rate cuts in September, reinforced by the Federal Reserve Chairman's confirmation of the start of reductions. The index is currently trading at the level of 101.265, which is considered a selling level that could continue its downward trend towards the 100.550 level, as per analyst analysis.

However, if the index rises and breaks through the 101.505 level with a daily close above it, this could signal a reversal from the downtrend to an upward trend, as per analyst analysis.