Dollar Index and Precious Metals in Focus as Jackson Hole Approaches

The US Dollar Index (DXY) is facing a crucial week of event risk, with Treasury Secretary Bessent's announcement on Iran sanctions and the Federal Reserve's preferred gauge of underlying inflation, Core PCE, set to be released. The focus then shifts to Fed Chair Kevin Warsh's keynote address at Jackson Hole, where any signal on the Fed's tolerance for persistent inflation or the timing of further tightening could drive a meaningful repricing in Treasury yields and the US dollar.

On the technical front, the DXY is testing confluent support at the August high-day close and May low at 98.68/69. A break below this slope would be needed to mark downtrend resumption with key support objectives eyed at the yearly open at 98.24 and the 61.8% retracement of the yearly range at 97.94.

Gold, on the other hand, has broken out of its yearly downtrend, extending more than 18.7% off the yearly low. The rally is now testing the May high-day close (HDC) at 4716, with initial resistance eyed near the 61.8% retracement of the March decline and the April high close at 4841/55.