Last week saw the Fed's hawkish pause. This week will bring it back into the spotlight as Fed Chair Powell presents two days of Congressional testimony regarding the central bank's policy on interest rates. On Wednesday, he will address the House Financial Services Committee, followed by the Senate Banking Committee on Thursday.
Although the Fed opted to maintain the current rates last week, indications were given that two additional rate hikes might be necessary. Powell acknowledged the ongoing struggle with inflation, stating that there is still a significant distance to cover.
Interestingly, the USDOLLAR remains in its weak channel, between the lower blue and red bands. Although the last few sessions have shown price appreciation, the RSI remains firmly on the soft side of 50. So, although the Fed has tended towards a hawkish bias, the greenback has not bought into it.
The Fed does not want inflation to get ahead of it and remains hawkish. However, recent inflation data does seem to show a moderation.
Nevertheless, it is anticipated that Powell will largely reiterate the stance taken after the Fed's recent decision, but investors will closely observe his testimony for any hints regarding the prospective trajectory of interest rates.
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.