U.S. Dollar Advances Amid Rising Bond Yields
The U.S. dollar climbed against its major counterparts in the
Asian session on Tuesday, as U.S. treasury yields rose amid
speculation that the tightening of the monetary policy by the
Federal Reserve will be gradual.
In his prepared remarks for hearing before Congress, Fed Chair
Jerome Powell said that the current surge in inflation is likely to
be transitory and it could move back to the Fed's 2 percent target
when supply imbalances are resolved.
The Fed chief gave a positive assessment of the labor market,
saying that employment should pick up in coming months as
vaccinations progress and the economy emerges from the
"We at the Fed will do everything we can to support the economy
for as long as it takes to complete the recovery," Powell
Powell's remarks soothed some of the concerns about
earlier-than-expected tapering and rate hikes by the Fed.
Powell will testify before the U.S. House of Representatives
Select Subcommittee on the Coronavirus Crisis later in the day.
Investors digested mixed comments from the Fed officials
regarding the outlook for monetary policy.
Dallas Fed President Robert Kaplan said that the central bank
should consider withdrawing stimulus "sooner rather than later,"
while St. Louis Fed President James Bullard hinted at upside risks
to inflation that may go higher.
But New York Fed President John Williams said that inflation
could move down to around 2 percent next year and in 2023, as
bottlenecks and imbalances are likely to subside.
The greenback climbed to a 5-day high of 110.54 against the yen,
from a low of 110.21 seen at 8:45 pm ET. On the upside, 112 is
possibly seen as its next resistance level.
The greenback reversed from its early session's low of 1.3937
against the pound and a 4-day low of 0.9169 versus the franc,
gaining to 1.3892 and 0.9209, respectively. The currency is seen
finding resistance around 1.37 against the pound and 0.94 versus
The greenback edged up to 1.1892 against the euro, 1.2387
against the loonie and 0.7507 against the aussie, after weakening
to 1.1920, 1.2357 and 0.7545, respectively earlier in the session.
The next possible resistance for the dollar is found near 1.16
against the euro, 1.25 against the loonie and 0.72 against the
In contrast, the greenback pulled back to 1.6990 against the
kiwi, from a high of 1.6963 hit at 1:30 am ET. The greenback is
likely to find support around the 0.72 level.
Looking ahead, U.S. existing home sales for May will be
published in the New York session.
At 10:00 am ET, Eurozone flash consumer sentiment index for June
will be out.
At 2:00 pm ET, Federal Reserve Chair Jerome Powell testifies on
the central bank's emergency lending programs and current policies
before the House Select Subcommittee on the Coronavirus Crisis, via
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