The EUR/USD pair maintains stability, reaching notable six-week highs.
The most widely traded currency pair in the market has experienced a significant increase overnight, with the current EUR/USD exchange rate at 1.0980.
The US dollar faced a decline following the speech delivered by Federal Reserve Chairman Jerome Powell. During his address to policymakers at Capitol Hill, Powell reiterated his previous stance on interest rates and did not rule out the possibility of further rate hikes.
This perspective aligns with the minutes from the June meeting of the Federal Reserve. Market expectations were already leaning towards a 25 basis point interest rate increase at the July meeting, which makes Powell’s hawkish comments less surprising.
Powell’s aggressive stance on interest rates was already known prior to his Wednesday speech. However, it has raised doubts in the market about the US economy’s ability to withstand the pressure.
As previously explained, a rapid and prolonged increase in interest rates could expedite a recession in the United States. Conversely, if the rate hike is too slow, it could fuel inflation. The Federal Reserve is facing a conundrum, and until a consensus is reached, it may be wise to stick to the previous strategy.
The post USD Declines: A Closer Look – June 22, 2023 appeared first at R Blog – RoboForex.
