Dollar Rise After Powell's Inflation Remarks

The U.S. dollar gained after Federal Reserve Chair Jerome Powell highlighted progress in inflation but did not signal imminent rate cuts. Powell's comments in congressional testimony fueled market speculations about future monetary policy moves. Economic data and geopolitical events further influenced currency movements, impacting global financial markets.

The U.S. dollar strengthened on Tuesday following Federal Reserve Chair Jerome Powell's comments on inflation. While acknowledging recent progress, Powell did not indicate a forthcoming cut in interest rates. He emphasized that inflation remains above the Fed's 2% target but has shown improvement.

Powell's remarks during congressional testimony hinted at a cautious optimism about inflation returning to target levels, necessary for any easing of monetary policy. 'The market is counting the days until we get a rate cut signal from Federal Reserve Chair Powell,' said Adam Button, chief currency analyst at ForexLive in Toronto. The dollar index saw a subtle increase to 105.09.

Friday's jobs report led traders to speculate on a potential rate cut, with the first expected in September. This week's key economic focus will be the June consumer price index, expected to show modest increases in headline and core prices. In Europe, political developments and the European Central Bank's cautious approach to rate reductions also affected the euro's performance.

(With inputs from agencies.)