The Federal Reserve's communication contributed to pressure on the dollar. The US Treasury Secretary, Janet Yellen, has taken the spotlight as a market driver. On Wednesday, her announcement on "blanket" bank deposit insurance overshadowed the dovish Fed hike.
However, Yellen's reassurance to markets yesterday that additional actions would be taken if needed provided some relief to the market concerns regarding US regional banking troubles. This has reduced the pressure on rate cut speculation and the dollar. This emphasizes how the market struggles to see the US small bank troubles being resolved without significant government support.
Overall, this supports a bearish bias on the dollar, as the situation is unlikely to develop into a systemic crisis, which would be USD positive. The market is anticpating Fed cuts later in the year and the unclear Fed communication is doing very little to push back against this.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.