US Dollar Weakens in Anticipation of Fed Chair Powell’s Comments

he US dollar is trading somewhat bearish as markets cautiously wait to hear from Fed chairman Jerome Powell later today at the end of the

Arslan Butt•Wednesday, January 27, 2021•1 min read

Early on Wednesday, the US dollar is trading somewhat bearish as markets cautiously wait to hear from Fed chairman Jerome Powell later today at the end of the central bank’s policy meeting. At the time of writing, the US dollar index DXY is trading around 90.22.

Traders are worried that Powell could reiterate the Fed’s commitment to keeping the monetary policy loose for an extended period of time to support economic recovery in the US after the pandemic. Expectations for more dovishness from the Fed are exerting downward pressure on the US dollar.

Additional weakness in the greenback was driven by the IMF’s latest projections for global economic growth. The IMF has turned more optimistic and revised estimates for global GDP higher as COVID-19 vaccine rollout and distribution gather steam around the world, even as stimulus efforts unleashed by governments and central banks support economic recovery.

Meanwhile, US Treasury yields posted a decline in overnight trading during the previous session, driving the US dollar lower as well. The decline was a result of an increased possibility that Biden’s latest stimulus proposal worth $1.9 trillion may be downsized and even delayed.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.