DXY inter-markets: all eyes on Yellen

The greenback continues to give away ground at the end of the week and remains poised to close its third week with losses in case the current bearish note picks up further pace in the next hours. Of course this will hinge on the tone of the speech by Chairwoman Janet Yellen at the Jackson Hole Symposium later today, particularly on any clue regarding the timing of the next rate hike by the Federal Reserve.

At the moment, the probability of higher rates to be announced at the September meeting has recently climbed to 21%, while it is above 41% when comes to a rate hike in December, all according to Fed Funds futures prices tracked by CME Group’s FedWatch tool.

Yields in the US money markets have been quite supportive of the greenback as of late despite the US Dollar index has been trading on the defensive during most of the week. In addition, hawkish comments by FOMC members, including auspicious remarks from VP S.Fischer, have also lent some support to the idea that a rate hike in September remains ‘on the table’.

The next relevant level for DXY on the downside emerges around 94.40, where is located the support trendline off 2016 low at 91.88 (July), ahead of 94.05, August’s low, which in case of being cleared will allow a visit to June’s low at 93.03. On the upside, the initial hurdle turns up in the 94.80/95.00 band, last week’s highs and a retracement of the June-July up move.