Dollar Rebound Fades as Gold and Bitcoin Rally Ahead of Key Economic Data

The US Dollar Index (DXY) is testing confluent support at the August high-day close and May low, according to technical analysis by FOREX.com. The DXY has rebounded off downtrend support, with a focus on this near-term recovery. A break or daily close below the lower parallel would be needed to fuel the next major leg of the decline.

The Core PCE report, due out on Wednesday, is expected to provide insight into underlying inflation, which remains elevated at 3.3% y/y. This, combined with Fed Chair Kevin Warsh's keynote address at Jackson Hole on Friday, could drive a meaningful repricing in Treasury yields and the US dollar.

Gold has broken out of its yearly downtrend, with the rally extending more than 18.7% off the yearly low. Initial resistance is eyed near the May high-day close at 4716, while key resistance stands with the 61.8% retracement of the March decline and the April high close at 4841/55.

Bitcoin has broken out of its May downtrend, with the crypto-rally now extending more than 38.5% off the yearly lows. The rally is testing the February trendline, with lateral resistance eyed just higher at the 200% extension of the June rally and the May high-day close (HDC) at 80,589-81,447.