Us Dollar Gains Demand As Powell Speech Looms

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Us Dollar Gains Demand As Powell Speech Looms

US Dollar (USD) Gains Demand As Powell Speech Looms

During Wednesday's trading session, the greenback stayed in demand as investors brace for Jerome Powell's speech, due later today.

The inflow towards the US Dollar can be viewed as the investors' positioning ahead of the high-risk event. In addition, it also signifies that investors believed that the greenback was the safer option than other assets ahead of the Fed chair's speech.

This increased demand for the greenback has also pushed the DXY higher by 0.2% and was last seen near 105.587. The sudden jump in the DXY has allowed it to move from its 2-month lows (104.84).

DXY Up From Weekly Lows

If the current trend in the Dollar index (DXY) continues, it will mean a healthy weekly gain for the greenback. In fact, it also will end up reversing the decline of the last week as well.

All of this is happening after a bunch of Fed speakers made it clear that rate hikes are still on the cards, given the situation of inflation.

Earlier, the US Dollar experienced one of its worst weeks, which was only last seen during mid-July. At that time, the Fed shied away from hawkish signals, which sent the greenback lower.

Now, the traders are positioning themselves as the Fed chair's speech will provide guidance on how the central bank will proceed further.

According to some experts, the Fed will likely look at the risks posed by the interest rates before going through any further rate hikes. So unless a major change in inflation takes place, the chances of any further rate hikes from the Fed are highly unlikely.

If the Fed provides a more hawkish signal than expected by the market, it will further fuel the greenback demand. On the contrary, a dovish signal or mixed messages will reverse any of the recent gains seen in the DXY. Now, it is a game of wait-and-see for the greenback, along with other currencies.

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