Dollar Declines Following Powell’s Comments

A dovish tone by the Federal Reserve Chairman Jerome Powell, in his testimony before Congress, pushed the U.S. Dollar (USD) lower on Wednesday.

Powell acknowledged progress in an economic recovery but said the economy remains far from achieving the substantial further progress needed to begin tapering asset purchases and then raising interest rates.

As for inflation, the Fed Chair said that the current increase is transitory, expecting inflation to moderate later, with the central bank preparing to deal with inflationary pressures if needed. These comments came shortly after data showed huge surges in both consumer and producer prices in the United States.

The Dollar Index (DXY) decreased by about 0.4% to 92.41, after going as high as 92.83 earlier.

The USD declined by 0.53% against the Euro (EUR) after two consecutive daily increases, with the EUR/USD reaching 1.1838, while against the Sterling Pound (GBP) the greenback retreated by 0.33% and lost 0.61% to the Japanese Yen (JPY).