The dollar index continues to strengthen, and the Fed remains cautious internally

On August 22, in the early trading of Asian market on Friday, Beijing time, the US dollar index hovered around 98.58. On Thursday, the US dollar index continued to strengthen, rising to an intraday high of 98.67 for a while, and finally closed up 0.43% to 98.62; the benchmark 10-year U.S. Treasury yield closed at 4.330%, and the 2-year U.S. Treasury yield closed at 3.794%. Spot gold continued to fall after opening, and fell to an intraday low of $3325.19 for a while during the session, and then recovered some lost ground and finally closed down 0.29%, closing at $3338.55/ounce; spot silver closed up 0.56%, at $38.10/ounce. Crude oil rose nearly 1% as Russia and Ukraine accused each other of stagnating the peace process and earlier U.S. data showed signs of strong demand from the largest oil consumer. WTI crude oil returned to above $63 and finally closed up 0.98% at $63.38/barrel; Brent crude oil finally closed up 0.86% at $67.00/barrel.

Analysis of major currency trends

Dollar Index: As of press time, the US dollar index hovered at $98.58. The market's response to the minutes of the FOMC meeting was relatively flat, because the meeting was held before the release of the latest employment and inflation data. Additionally, investors are choosing to wait for Fed Chairman Powell to speak at Jackson Hall Economics Symposium before building large positions on the Fed’s possible policy outlook. Technically, the support level is currently clearly defined between 98.317 and 97.859, and the key volatility low of 97.626 marks downside risk. Daily charts show room for further upside, especially if Powell avoids overturning growingif the interest rate cut is expected.

Euro: As of press time, the euro/dollar hovers around 1.1615. Strong business activity data outperformed weak jobs reports, prompting traders to cut bets on the Fed's interest rate cut at its September meeting. People's eyes will turn to Powell. Dove tilts could push up the EUR/USD as the spread between the United States and the EU (EU) will narrow. Technically, the nearest support level of the EUR/USD is in the range of 1.1575–1.1590. A break below the 1.1575 level will push the EUR/USD toward the next support level 1.1450–1.1465.

GBP: As of press time, GBP/USD is hovering around 1.3420. The pound fell for the fourth straight day against the USD on Thursday, with the pound/USD falling below the 1.3450 level. The dollar strengthened across the board after the release of optimistic Purchasing Managers Index (PMI) data, sharply rose to a weekly high of 98.50. The focus now turns to the Jackson Hall workshop, with Fed Chairman Jerome Powell scheduled to speak on Friday. His remarks will be closely watched to get clues about the Fed's monetary policy outlook and may set the tone for the short-term direction of the dollar. Technically, the successful test of the 1.3400–1.3415 support level will open the road for testing the next support level 1.3300–1.3315.

Analysis of gold and crude oil market trends

1) Analysis of gold market trends

On Friday, gold hovered around 3339.56. Federal Reserve Chairman Powell is scheduled to deliver economic outlook and Fed policy stance at the annual global central bank meeting held in Jackson Hall on Friday, and Powell's speech is expected to trigger a major market trend. Gold prices fell on Thursday after mixed data released by the United States, with gold falling 0.3% on Thursday, while traders prepared for the Jackson Hall seminar, waiting for Fed Chairman Powell's speech on Friday.

Technical: Gold prices consolidate below the 20-day simple moving average (SMA) and 50-day moving average convergence area (3344-3348 USD/oz), and lack direction. The Relative Strength Index (RSI) turned bearish, but the indicator is still close to the neutral line. If the gold price remains below the above-mentioned $3344-3348 USD/oz area, then the gold price is expected to test the 100-day moving average of $3306 USDRMB/ounce, then aim for $3300/ounce.

2) Analysis of crude oil market trends

On Friday, crude oil trading was around 63.39. WTI crude oil rose to near a two-week high due to signs of strong U.S. demand and uncertainty in efforts to end the Ukrainian war. Data released by the U.S. Energy lwcgm.cnrmation Administration (EIA) on Wednesday showed that crude oil inventories fell more than expected last week. The weekly report notes strong demand in the world's largest oil consumer and supports WTI prices. U.S. crude oil inventories fell by 6.014 million barrels in the week ending August 15, up 3.036 million barrels the previous week. The market is consistently estimated that inventory will be reduced by 1.3 million barrels.

Technical: Thursday's high hit a 7-day high, and crude oil prices are expected to close near the highest daily closing price in the past eight days. If the closing price is above $64.32, it will hit its highest closing price in nine days, indicating further short-term bullish momentum.

Forex market trading reminder on August 22, 2025

14:00 Germany's second quarterly unrevised GDP annual rate final value

20:30 Canada's June retail sales monthly rate

22:00 Federal Reserve Chairman Powell delivered a speech

01:00 the next day to the total number of oil drilling rigs from the United States to August 22

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