Forex Today: US Dollar recovery loses steam as focus shifts to Jackson Hole

Here is what you need to know on Friday, August 23:

The US Dollar (USD) Index struggles to build on the recovery gains it recorded on Thursday and retreats toward the lower limit of its weekly range. The US economic docket will feature New Home Sales data for July on Friday. More importantly, Federal Reserve (Fed) Chairman Jerome Powell will deliver a keynote speech at the Jackson Hole Symposium at 14:00 GMT.

The USD outperformed its rivals on Thursday as the preliminary S&P Global PMI data for August showed that the economic activity in the private sector continued to expand at a healthy pace. Meanwhile, the risk-averse market atmosphere, as reflected by the sharp declines seen in Wall Street's main indexes, provided an additional boost to the currency. After rising 0.4% on Thursday and snapping a four-day losing streak, the USD Index stays on the back foot and was last seen losing 0.2% on the day at around 101.30. In the meantime, US stock index futures gain between 0.3% and 0.55%, pointing to an improving risk mood in the European session.

Bank of Japan (BoJ) Governor Kazuo Ueda told the Japanese parliament on Friday that there is no change in their stance about adjusting monetary easing if the economy and inflation continue to move in line with forecasts. Ueda further noted that they are not thinking about selling long-term Japanese government bonds as a tool to adjust interest rates. USD/JPY came under renewed bearish pressure following Ueda's remarks and was last seen trading at around 145.50, where it was losing 0.5% on the day. Earlier in the day, the data from Japan showed that the National Consumer Price Index rose 2.8% on a yearly basis in July, matching the flash estimate.

EUR/USD lose more than 0.3% on Thursday but managed to hold above 1.1100. The pair holds its ground early Friday and trades near 1.1120.

GBP/USD closed flat on Thursday despite the USD strength. The pair continues to stretch higher in the European morning and was last seen trading above 1.3100.

Gold extended its correction from the record-high it set earlier in the week and lost over 1% on Thursday. XAU/USD edges higher in the European morning on Friday but remains below $2,500.