Of course, the Dollar is still benefiting from Jerome Powell's speech at the Jackson Hole Symposium. But it is also important to note that the bond market has remained comparatively stable. So the Fed's rate hike path has only been questioned by the stock market, which has shown the biggest move (down) since Friday last week. In this respect, it is questionable whether the verbal adherence to further interest rate hikes, which have always been priced into the bond and currency markets, can lead to a further appreciation of the Dollar.
From a technical perspective, things are simpler with the Dollar-Index (DXY). Above 109.30 Dollar shorts are in danger and it depends on personal depth of pockets how much higher prices can be tolerated. As I wrote in the last newsletter, going short on a daily close below the 108.00/70 support zone is probably the smarter approach - especially against the background of the weak stock market leading to continued Dollar buying (“safe haven”).
(source: fxstreet.com)
The Euro has been trying to start a recovery since last week, but has not yet been able to overcome the parity magnet. These attempts are probably mainly due to the fact that some ECB members have surprised with hawkish comments. So far, however, these are only weak statements to support the Euro. The real test should come next Thursday at the ECB meeting (see G10 Central Bank Calendar). After all, the ECB is two weeks ahead of the next FED meeting. Maybe it will help the Euro at least for a while?
For the time being, however, I will not be bullish on the Euro. In fact, I am surprised at how well the EURUSD currency pair is still holding up. The 0.9950 level looks like a minor support and quick Euro longs above could pay off. The bigger support comes in at the 0.9900 treshold and in the medium/long term I still think a test is likely. Next resistances can be found around 1.0045/55 and 1.0090. Above the mid Bollinger band (1.0108) I would get rid of shorts.
Good luck,
Sebbo