Dollar Edges Lower; Powell Testifies on Capitol Hill This Week

Dollar Index

Dollar Index is trading down 0.16% at 104.031

The U.S. dollar edged lower in early European trade Tuesday, in line with the wider increase in risk sentiment, but remained elevated with the U.S. Federal Reserve seen retaining an aggressive tightening stance.

At 3:15 a.m. ET (0715 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower at 103.990.

The U.S. central bank announced an interest rate increase of 75 basis points last week, its largest hike since 1994, and traders will now focus on the testimony of Fed Chair Jerome Powell to the Senate and the House on Wednesday and Thursday for clues of future moves.

St. Louis Fed President James Bullard warned that U.S. inflation expectations could “become unmoored without credible Fed action,” while former Treasury Secretary Lawrence Summers suggested that to counter price pressures, the U.S. jobless rate would need to rise above 5% for a sustained period.

Another two Federal Reserve policy-makers are also due to speak later in the day, while the economic data calendar centers around housing data, with existing home sales for May due at 10:00 a.m. ET (1400 GMT).

USD/JPY was up 0.1% at 135.19, not far off a 24-year low of 135.58 yen hit last week, as the Bank of Japan retained its accommodative monetary policy stance even as a number of major central banks raised rates.

Japanese Finance Minister Shunichi Suzuki said earlier on Tuesday that he was concerned about the recent sharp yen weakening and would appropriately respond to exchange market moves if necessary.

On technical fronts Dollar Index RSI stood at 66.29 and currently it is trading above all MA. So, BUY position can be taken with following target and stoploss:

TRADE SIGNAL – : Dollar Index – BUY: 103.99, TARGET: 104.40, STOP LOSS : 103.80

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