The U.S. dollar rebounded in the Asian session on Wednesday, after falling overnight following comments from Fed Chair Jerome Powell that an interest rate hike would not happen any time soon.
The currency fell along with yields after Powell said that the Fed would be patient in waiting to tighten monetary policy.
“We will not raise interest rates pre-emptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances,” Powell said in a hearing before the House Select Subcommittee on Tuesday.
Powell’s comments calmed markets after the Fed’s shift in tone kept traders on the edge last week.
Investors digested mixed comments from Fed policymakers regarding scaling back of the stimulus measures.
San Francisco Fed President Mary Daly said on Tuesday that the economy is likely to meet the conditions for tapering later this year or early next year.
New York Fed President John Williams, however, argued that any discussion about a liftoff is still far away.
The greenback rose to 1.1916 against the euro, from a 5-day low of 1.1952 seen on Tuesday. The greenback is seen finding resistance around the 1.16 level.
The greenback appreciated to 110.88 against the yen, its highest level since March 31. The currency is likely to find resistance around the 112.00 level.
The greenback edged up to 1.3924 against the pound, after a 5-day drop to 1.3964 on Tuesday. Should the greenback rises further, 1.37 is likely seen as its next resistance level.
The greenback gained to 0.9200 against the franc, reversing from a 4-day low of 0.9169 touched on Tuesday. On the upside, 0.94 is likely seen as its next resistance level.
The greenback bounced off to 0.7538 against the aussie, 0.6995 against the kiwi and 1.2329 against the loonie, after having fallen to 5-day lows of 0.7564, 0.7036 and 1.2302, respectively during yesterday’s trading session. Next key resistance for the greenback is seen around 0.72 against the aussie, 0.68 against the kiwi and 1.25 against the loonie.
Looking ahead, PMI reports from major European economies are due in the European session.
Canada retail sales for April and U.S. new home sales for May will be featured in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com
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