The hawkish Fed speech hit the currency market with all his strength.
Worldwide Currencies Analysis
If we then add the the instability due to international condition, the Covid pandemic around the corner and the inflation you get an explosive mix.
The USD on Wednesday overcame selling pressure as it continues to rise against major currencies, but investors are still taking profits.
The US dollar index (DXY) touched a low of 99.90 before reversing course and trading up about 0.3% on the day into the 100.60 where it is traded usually.
Fed Chair Jerome Powell, as expected announced that 50 basis point rate hikes are likely at upcoming meetings, while usually more dovish member of the Federal Open Market Committee (FOMC), Mary Daly even mentioned a possibility for 75bps move.
AUD/USD and NZD/USD traded both in red with respective losses of 1.0% and 1.1%
The loonie took a beating today, but unluckily for Canadians it looks like they’ll not be getting some relief soon, even with stronger oil prices
The USD/CAD exchange rate rose from under 1.2500 towards the end of yesterday’s trading session to around 1.2600.
The rest of the major G10 currencies were manly focused on the IMF Meeting where Christine Lagarde was as usual balanced, instead the “dovisher” Vice President Luis de Guindos remarked the possibility of a first rate hike in July.
The EUR/USD pair continued its upward trajectory, with the currency reaching as high as 21-Day Moving Average in early European trade before reversing 100 pips lower to low 1.0800s during US market hours.
Similarly, the GBP/USD had an analogue price action attempting to break above its 21DMA in the 1.3075 area only for it then reverse back down near-term support at 1.3025.
Yen keeps struggling among higher yields in US and EU. USD/JPY went up about 0.4% rallying into the 123.30. Bullish eyes are pointed at the potential high at 129.
This can be likely to happen if US will still push higher yields and Bank of Japan keeps the defensive stance.
