Dollar weakened overnight as Fed Chair Jerome Powell indicated in the post meeting press conference that “it is not time yet” to start discussing any change in the monetary policy stance. He added that recovery is “uneven and far from complete.” Fed is still “a long way from our goals” and it’s “going to take some time” to have substantial further progresses.
Powell also talk down the “one-time increases in prices”, as they are “likely to only have transitory effects on inflation.” “We think of bottlenecks as things that in their nature will be resolved as workers and businesses adapt, and we think of them as not calling for a change in monetary policy since they’re temporary and expected to resolve itself,” Powell said. “We know the base effects will disappear in a few months.”
Dollar index dropped further to close at 90.60 overnight. Near term outlook stays bearish with 55 day EMA (now at 91.54) intact. Retest of 89.20 should be seen next. Break there will resume larger fall from 102.99.
