US Dollar Digs into Support as Focus Shifts Towards Jackson Hole

US Dollar Talking Points:

• The US Dollar is digging into support today, attempting to arrest the three-day sell-off.
• While USD was bid through the first half of last week, the past three trading days have seen much of that move erased as expectations build for Powell to avoid the topic of taper at his upcoming appearance at Jackson Hole.
• The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

The US Dollar is holding on to support at a familiar spot on the chart, taken from the 92.80-92.90 zone in DXY. This is a spot of previously unfilled gap from early Q2 trade that came back into the equation as short-term resistance-turned-support.

Last week saw USD strength flare up to a fresh 2021 high. This was rooted in the release of FOMC meeting minutes from the July rate decision, in which most participants saw the start of taper by the end of 2021; and that led to a consistent run of USD strength that eventually brought upon fresh nine-month-highs.

But that strength didn’t last for long; prices began to turn on Friday and that lasted through this week’s open. This gives the appearance that markets are now discounting the chance that Powell touches on taper at the upcoming Jackson Hole Economic Symposium and, instead, looks to next week’s Non-farm Payrolls data which would be the last such release before the September FOMC rate decision. And that September meeting should be interesting as it’s a quarterly meeting, and the Fed will release updated projections and forecasts that may provide clue to their expected timing.

To learn more about the Fed or Non-farm Payrolls, check out DailyFX Education

US Dollar Four-Hour Price Chart

Chart prepared by James Stanley; USD, DXY on Tradingview

— Written by James Stanley, Senior Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX