Why did USD fall? Overview for 22.06.2023
The market’s most traded currency pair has increased noticeably overnight. The current EURUSD quote is 1.0980.
The US dollar dropped after the speech delivered by the chairman of the Federal Reserve System Jerome Powell. Speaking before policymakers at Capitol Hill, Powell stuck to his previous viewpoint concerning the interest rate and did not exclude that further growth of the rates might become a good option.
This viewpoint goes in line with the minutes of the June meeting of the Fed. Market expectations suggested something similar - a rise of the interest rate by 25 basis points in 34 days, at the July meeting.
Powell’s aggressive position concerning the interest rate had been known before his speech on Wednesday. So, such hawkish comments were a surprise for no one but made the market doubt whether the US economy was ready to counter the pressure.
As was explained before, too fast and lengthy growth of the interest rate will speed up the US recession. And if the rise is too slow, this will push inflation upwards. The Fed is perplexed, and while there is no universal decision, it might be wise to stick to the previous strategy.
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboMarkets bears no responsibility for trading results based on trading opinions described in these analytical reviews.
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