U.S. dollar selling pressure was felt across most major currency pairs with both EUR/USD and GBP/USD edging higher at the start of the week.
Volatility could pick up Tuesday with market participants eyeing Fed Chair Powell’s semi-annual congressional testimony today at 15:00 UTC. Powell is expected to reiterate the accommodative stance of the Federal Reserve and the need for more fiscal stimulus. Traders will however pay close attention to potential remarks on the Fed’s willingness to keep borrowing costs low amid the recent rise in Treasury yields. While dovish comments could lead to another stretch of dollar weakness, another potential driver of U.S. dollar volatility includes the fiscal stimulus package of $1.9 trillion proposed by President Joe Biden. If there is nothing in the way of finalizing a stimulus deal, the dollar could strengthen.
Furthermore, we have the Eurozone’s Core Inflation Rate scheduled for release at 10:00 UTC which could have a short-lived impact on euro crosses.
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