Dollar rebounds strongly after surprising hawkish comments from Fed Chair Jerome Powell. In a hearing with the Senate Banking Committee, he said, “At this point, the economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases … perhaps a few months sooner.’ He added, “I expect that we will discuss that at our upcoming meeting.”
“The word transitory has different meanings for different people. To many it carries a sense of short-lived. We tend to use it to mean that it won’t leave a permanent mark in the form of higher inflation,” Powell said. “I think it’s probably a good time to retire that word and try to explain more clearly what we mean.”
EUR/USD tumbles sharply on the news, after breaching 1.1373 resistance very briefly. Attention is now on whether selling would gather momentum to push it through 1.1182 to resume the larger down trend from 1.2348.
