The GBP/USD Pair Climbed To Around 1.2100, The EUR/USD Pair Is Above 1.0700
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The dollar fell as Powell spoke. The dollar fell Wednesday after Federal Reserve Chairman Jerome Powell refused to significantly tighten his tone on inflation in a closely watched speech, despite last week's strong employment data.
USD/JPY
The yen tumbled earlier this week as robust US jobs data suggested the Fed had more room for interest rate hikes.
Recently, Japan's central bank countered speculation about another policy adjustment by keeping interest rates very low and leaving its yield control policy unchanged.
As things stand, it seems that the market is having a hard time assessing the way forward as strong US data brings constant warnings of more hikes, which usually support USD valuations. At the same time, Japan is considering nominations for the top BoJ position for April, as the likelihood of policy normalization at the ultra-dovish Bank of Japan by the new incumbent cannot be ruled out.
In the morning, the USD/JPY pair started rising towards 131.30. USD/JPY traded above 131.00 for the following hours of trading but fell below in the European session and is now trading at 130.6910.
EUR/USD
EUR/USD rebounded towards 1.0750 on Wednesday after falling below 1.0700 late Tuesday but struggled to gain further momentum. In the absence of high-impact data releases, investors will pay close attention to comments from Fed officials. Currently, the EUR/USD pair has fallen below this level, but slightly to the level of 1.0740.
On Tuesday, mixed comments from European Central Bank (ECB) officials made it difficult for the euro to gain an advantage over its rivals. ECB politician Francois Villeroy de Galhau said they are not very far from the peak of inflation. On a hawkish note, policymaker Joachim Nagel reiterated that further significant interest rate hikes would be needed, adding that ECB rates were not restrictive yet. Finally, Isabel Schnabel, member of the Executive Board of the ECB, took a neutral tone.
Federal Reserve Chairman Jerome Powell said US interest rates may need to be raised while the process of "disinflation" appears to be underway.
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GBP/USD
At the end of Tuesday, FOMC Chairman Jerome Powell also confirmed good labor market data and reiterated that they will probably have to make further rate hikes. On an optimistic note, Powell said he expected 2023 to be "a year of significant decline in inflation." This remark made it harder for the US Dollar Index to maintain its upward momentum and helped GBP/USD recover some of its losses this week.
From the UK's perspective, the strike action remains a concern for the government and civil servants are planning to carry out another strike on March 15. Chancellor of the Exchequer Jeremy Hunt will present his fiscal plan on the same day and will be under additional pressure to possibly reassess inquiries about the pay settlement. Overall, it is bearish for the pound as strike action disrupts the UK economy and challenges UK leadership.
GBP/USD pair gained momentum and climbed to around 1.2100 on Wednesday. Currently, the GBP/USD pair is trading above 1.2090$.
AUD/USD
The Aussie pair is defending support at 0.6950 with the US Dollar generally subdued so far.
The Aussie pair surged above 0.6990 today but failed to maintain momentum and is currently trading above 0.6980.
Yesterday the RBA raised rates by 25 bp.
Source: finance.yahoo.com, investing.com
