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US Dollar Price Setup After Powell: EUR/USD, GBP/USD, USD/JPY

March 8, 2023

Via: DailyFX

The US dollar looks set to gain further against some of its peers on relative outperformance of the US economy and monetary policy edge. In his semi-annual testimony to lawmakers, US Federal Reserve Chair Jerome Powell stepped up hawkishness, saying the ultimate rate peak likely to be higher than expected and the central bank is prepared to increase the pace of rate hikes if needed.

As a result, odds of a 50-bps rate hike at the March 21-22 FOMC meeting have increased, with US rate futures now pricing in a terminal fed funds rate at 5.63% by September from 5.48% before Powell’s testimony, and 5% at the end of January, close to 100 bps higher than the current Fed policy rate of 4.50%-4.75%.

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