- USD is back on the front foot in Asia, but the tide could quickly turn.
- The technical basis for a continuation to the downside is compelling, at least until the 38.2% Fibo.
- Fed speakers are the focus for the week while traders await US economic data.
At the time of writing, DXY is higher by over 0.1% and is finding support following the prior bearish correction from 92.40.
The US dollar is being held up on Tuesday in Asian markets while traders await the Q&A session as the US Federal Reserve chair Jerome Powell is expected to give guidance in his testimony to US Congress.
-
Fed's Powell: Inflation has increased notably in recent months
The greenback had been on the march in a sharp rally following the Fed's surprise hawkish hold last week that flagged sooner-than-expected interest rate hikes.
In the US session, New York Fed President Williams said the economy hasn't improved enough to pare policy stimulus.
St. Louis Fed President James Bullard also spoke and said that the central bank will have to stay "nimble" as the US economy reopens after the COVID pandemic.
In prepared remarks, Powell has noted sustained labour market improvement and the recent increase in inflation.
For the Q&A, analysts are expecting him to attempt to impose his assessment that the very strong inflation prints we’ve seen recently will fade.
DXY technical analysis
Bears are targeting a 38.2% Fibonacci correction ahead of the deeper support structure.