US dollar Rises as Powell promises to be hawkish The FOMC terminal rate will likely be higher than originally predicted, according to the Fed chairman, who has adopted an aggressive attitude.

US dollar continues to rise, Following Powell’s comments going public.

Beginning his two days of appearances on Capitol Hill. Jerome Powell gave the Federal Reserve’s Semiannual Monetary Policy briefing before the U.S. Senate Committee on Banking, Housing, and Urban Affairs.

The Fed Chair adopted an aggressive stance in scripted comments. Reiterating that the Fed is committed to restoring price stability, and will stay the course until the job is done. This is a signal that borrowing costs will proceed to increase in the near future,

US dollar was boosted by the federal bank’s hardline repricing of its monetary policymaking forecast

Powell also alerted Lawmakers to the risks associated with upside inflation posed by robust economic activity, and the need for decisive action to control those risks.

The head of the federal bank also said that it’s probable that the FOMC terminal rate will end up being higher than initially predicted. And, that policymakers are ready to quicken the pace of tightening if necessary.

Regarding the outlook, Powell stated that officials would decide at each gathering based on all of the evidence that was being received.

He also issued a warning that the fight against inflation may require a softer job market as there are few indications of disinflation in core services other than housing.

Powell’s comments raised the hopes of the Fed’s aggressive stance

The US. dollar continued to rise as soon as Powell’s comments were broadcast. Raising forecasts for the FOMC’s peak rate and the short end of the Treasury curve.

US DOLLAR GRAPH FOR 2023 FED FUNDS FUTURES IMPLIED YIELDS

Source: TradingView

Additionally, Fed swaps were repriced to favor a 50 bp increase in March over a 25 bp increase. Providing further evidence for more assertive interventions. That will be in reaction to persistent inflationary pressures.

The short-term dynamics of monetary policy are likely to favor the US dollar, which means this month’s revival of the DXY indicator may continue.

Technical Perspective

Technically speaking, the daily graph of the U.S. dollar (DXY). That reveals that the price has broken above significant trendline resistance. Which has been in effect since Oct 2022. Confirming the near-term bullish bias for the greenback.

After this bullish breakout, attention will turn to the next limit, which is the high from January at 105.63.

Bulls could proceed towards 106.18, the 38.2 percent Fib retracement of the Sept 2022/Feb 2023 decline. If they are successful in clearing this handle. On the other hand, if sellers come back and cause a pullback, early support is seen at 104.90, and then 104.00.