Last week, the US dollar index experienced its fifth consecutive weekly gain due to two main factors. Firstly, the continuous rise in long-term Treasury yields and secondly, driven by risk aversion sentiment.

【Source:MacroMicro 】
The increase in US Treasury yields was attributed to strong economic data from the United States and the hawkish tone of the Federal Reserve's July meeting minutes.
Data revealed a 0.7% month-on-month growth in US retail sales for July, surpassing market expectations of 0.4% and the previous value of 0.2%, indicating the resilience of the US economy. Additionally, the July meeting minutes of the Federal Reserve indicated that most committee members believed there was a significant upside risk to inflation as it remained well above the Fed's long-term target, while the labor market remained tight. This could require further tightening of monetary policy.
These factors intensified concerns in the market about the Fed maintaining the current high level of interest rates for a longer period, thereby providing further support to the US dollar.
Meanwhile, risk aversion stemmed from market concerns over fluctuations in the Chinese economy and the renminbi exchange rate. The recent increase in credit risks in China's real estate sector has heightened pessimistic sentiment regarding Chinese economic growth, leading to a further decline in risk appetite and consequently supporting the US dollar.
Mitrade Analyst:
This week, attention will be focused on the August PMI data for Europe and the United States, as well as the Jackson Hole Global Central Bank Symposium. If Fed Chairman Powell's speech leans hawkish, the US dollar is likely to continue to receive support.
On the technical front, the US dollar index has already surpassed the 200-day moving average, indicating a strong buy signal. However, the RSI is approaching overbought territory, and some oscillation indicators are showing sell signals, suggesting the possibility of a short-term pullback in the US dollar. Support is seen at 102.4, while resistance is at 104.2.

【Source:TradingView】