US Dollar Firms Despite Recession Chat from Fed Chair Powell. Will USD Go Higher?

US Dollar Firms Despite Recession Chat from Fed Chair Powell. Will USD Go Higher?

US Dollar, USD, Fed, Powell, USD/JPY, Nakao, AUD, NZD, Crude Oil – Talking Points

  • The US Dollar has held its ground despite recession talk
  • Risk related currencies were hit but equity markets are unscathed
  • The Fed Chair will be testifying again today.Will he move USD?

The US Dollar has steadied in the aftermath of Fed Chair Jerome Powell’s testimony to Congress.

He acknowledged that a recession is “certainly a possibility” and said that recent events have, “made it more difficult to achieve what we want, which is 2% inflation and still a strong labour market.”

He also said that the chances of achieving a soft landing for the economy was “very challenging.” Treasury yields were lower across the curve.

All the recession talk sent growth related currencies lower with the Aussie and the Kiwi hit the hardest.

Crude oil was sent packing, the WTI futures contract is near US$ 104 bbl while the Brent contract is under US$ 110 bbl. Gold is steady, just above US$ 1,830 an ounce.

APAC equities are mostly in the green to some degree today, with the notable exception being the growth sensitive Kosdaq index, down around 2.5%.

Elsewhere, USD/JPY went lower after former Japanese Vice Finance Minister for International Affairs Takehiko Nakao said that the current level of the Yen was not good for Japan’s economy. He said that the prospect of intervention, “shouldn’t be eliminated.”

Looking ahead, there are a series of European PMIs coming out as well a number of ECB speakers. Fed Chair Powell will also be testifying again later.

The full economic calendar can be viewed here.

US Dollar Technical Analysis

The US Dollar index (DXY) remains above an ascending trend line and above the 21-, 55- and 100-day simple moving averages (SMA) but below the 10-day SMA.

This could suggest that bullish momentum is pausing. If the price crosses back above the 10-day SMA, bullish might momentum may unfold. All period SMAs have a positive gradient and this might support bullish momentum.

Resistance could be at recent peak of 105.79. On the downside, support could be at last week’s low of 103.42 or further down at the May low of 101.30.

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

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