The American currency index (DXY) is growing during the Tuesday's trading session. From the opening of the day DXY recovered by 0.15% and quoted at 90.10. The dollar demonstrates local correction after the day before the psychological support was tested by 90.00 points, which happened for the first time since mid-January 2021.
The positions of the US currency remain vulnerable against the background of the expectation of the approval of new measures to support the American economy in the amount of $ 1.9 trillion. With the next calls to the Congress, speed up the process of coordination of the new fund of economic assistance was made on Monday, the head of the US Department of Finance, Janet Yelevlen, stating that "financial stimulation is vital to restore the former economic activity and normalization of people's lives." According to her, "if the decisions are not now, then much more funds will be required to the economy."
Today, the additional pressure on the dollar may have a speech by the Chairman of the Federal Reserve System of Jerome Powell before the Congress Banking Committee, which is scheduled for 18:00 Moscow time. The consensus market forecast assumes that Powell will express confidence in restoring the economy, but will also present arguments in favor of maintaining a soft monetary policy. Hints that the Fed can respond to accelerating inflation with raising rates are likely to provoke panic sales in the bond market, however, such statements are unlikely. We will remind, earlier Powell already commented on the lack of concern from Fed-in-law due to increasing inflation, since the current speaker of the consumer price index is more than permissible against the background of unprecedented stimulation. In other words, the Fed is ready to give inflation to grow, and even higher than the previous target orientation in 2%. Especially for this, the American regulator in the middle of last year moved to the inflationary targeting policy, in which the Fed will retain a bet on a historical minimum even if the consumer price index will be higher than 3%. Given the said, "short" position on DXY remains in priority and today's potentially soft Powell rhetoric may well be the next catalyst for its decline.
DXY SELLLIMIT 90,30 TP 89,20 SL 90.70
Artem Deev, Head of Analytical Department Amarkets
Read Original Articles on: Investing.com