The US Dollar Approaching Monthly Peaks Supported by Powell’s Comments

The dollar, when tracked by the US dollar index DXY, expands optimism in the second half of the week and approaches monthly tops around 92.80, and the index advances for the second consecutive session and trades near the monthly peak located in the 92.80 / 85 range, always on the back of resuming demand for the pound, higher US yields and after it appears that market participants have already absorbed both of President Powell’s testimonies.

Indeed, President Powell repeated his message in the Senate on Thursday. However, he indicated that high inflation may continue more than initially expected, which could prompt a reassessment by the Federal Reserve, and also in support of sentiment surrounding the dollar, the Federal Reserve Bank of Chicago Evans said that reducing its bond-buying program may begin by end of the year, while St. Louis Federal Reserve Bank J. Bullard called for the current emergency measures to be removed.

In the bond market, yields on the key US 10-year bonds rose by basis points after jumping near 1.30% on Thursday, and an interesting day is expected on the US calendar, as retail sales and the preliminary gauge of consumer confidence for July will take center stage.

DXY is recovering with monthly highs around 92.80 so far amid strong buying bias surrounding the Dollar. Meanwhile, the index’s positive stance remains supported by the strong pace of economic recovery, higher-than-expected inflation numbers, and escalating rumors of a rate hike and a lower-than-expected quantitative easing.