The U.S. dollar bounced back from a nearly two-decade peak against a basket of major currencies on Thursday as investors turned to a speech by Federal Reserve Chairman Jerome Powell next day for fresh clues on the path of monetary policy.

The dollar index, which measures the greenback against six peers, fell 0.15% to 108.47, but remained close to its highest level since September 2002 of 109.29 reached in mid-July.

Investors are bracing for the Fed to double down on its commitment to killing inflation at its annual meeting in Jackson Hole, Wyoming.

Money markets have cut expectations that the US central bank could lean toward a slower pace of rate hikes after a chorus of hawkish comments from the Fed in recent weeks, and currently place a 60.5% chance of another outsized 75 basis point rate hike next month vs. 39.5% chance of a half-point increase.

“Expectations of a hawkish message from FOMC Chairman Powell in Jackson Hole are likely to keep upward pressure on the dollar,” Commonwealth Bank of Australia analyst Christina Clifton wrote in a note to clients.

“However, there is a risk that the speech will be deemed not hawkish enough and that we will see some recovery in the dollar.”

The dollar fell 0.25% to 136.775 yen, but remained close to this week’s one-month high of 137.705. The euro rose 0.14% to $0.99825 after hitting a 20-year low of $0.99005 on Tuesday.

The single currency was hit by growth worries as the region grapples with an energy crisis and investors are on edge before Russia shuts down gas supplies via the main Nord Stream 1 pipeline for three days from Wednesday due to unscheduled maintenance.

Sterling rose 0.17% to $1.18105 after falling on Tuesday to a low since March 2020 at $1.1718.

The Australian dollar rose 0.19% to $0.6920, from a more than one-month low of $0.6856 earlier this week.

New Zealand’s kiwi lagged its Antipodean counterpart, up 0.06% to $0.6194, hampered by data showing weaker retail sales.

On Monday, it was the lowest for a month – 0.6157 dollars.

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