The majors got a whack on Tuesday after new Federal Reserve Chairman Jerome Powell made his debut. Powell has his first major speaking engagements this week and is presenting to Congress.
While his initial statement had limited impact on the markets, when he was asked about the potential for rate hikes going forward, things changed.
Powell was very much upbeat on the state of the US economy and wage growth. That sparked a dollar rally. It appears the pundits are now feeling confident that rate rises will be going ahead as planned.
At the same time stocks sold off. After a strong bounce over the last week, we saw our first red day in some time. The rising USD also caused the commodity currencies to get hit hard. Lead by the AUD and NZD.
The USD Runs into Resistance
Resistance at 90.50 on the DXY has been a big focus for me as regular readers would probably know. Pulling back above that level to me would signal that we have a base in place and that there is room to now move higher.
Fundamentally, I think Powell’s comments might be a turning point as we have a clear path forward on interest rates.
I’m not jumping the gun though and will need to see how we react at the 90.50 before forming a clear bias.
US Dollar Index (DXY)- 240 min Chart.