U.S. Dollar Extends Decline On Powell Remarks

The U.S. dollar extended its recent decline after Federal Reserve Chair Jerome Powell acknowledged uncertainty around increasing inflation risks at yesterday’s hearing. While Fed policy makers believe that price increases will likely wane, Powell said that inflation overshoots “have been larger than we expected and they may turn out to be more persistent than we expected.” He said the Fed will not raise interest rates preemptively while policy makers “will wait for actual evidence of actual inflation or other imbalances.”

The EUR/USD extended its rebound until 1.1950. Above 1.1960 we expect the pair to head for a test of 1.20. A current support is seen at 1.1850.

The GBP/USD refrained from breaking above 1.3965 – at least until this morning. Above 1.3965 we will pay attention to a potential test of 1.40 and maybe even a run for 1.4080. A current support is seen at 1.38.

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