The dollar weakened on Thursday after Federal Reserve Chairman Jerome Powell paved the way for a rate cut later this month, promising to "act appropriately" so that the world's largest economy could sustain its ten-year growth.
In his speech to Congress, Powell pointed to a “broad” global weakness that clouded the US economic outlook against the backdrop of uncertainty over the consequences of the Trump administration’s trade dispute with China and other countries.
Economists believe that the speech of the head of the American regulator was held in dovish tones in most areas. This is a bit surprising, considering the favorable changes in trade after the G20 meeting last month and the good performance on NonFarm Payrolls.
In addition to Powell’s dovish tones, the minutes of the previous Fed meeting showed the unity of many of its members in that the country will soon need additional incentives that will revive speculation about an aggressive reduction in interest rates.
Against this background, the EURUSD pair is trading with an increase at the mark of 1.1269.
The dollar also fell by 0.5% to 107.96 against the Japanese yen, continuing to fall from a six-week high of 108.99, set on Wednesday, before Powell's performance.
The dollar index versus six major currencies fell by 0.2% to 96.877, increasing losses to the second session in a row.
The British pound, on the contrary, rebounded from six-month lows to $ 1.2529, despite the prevailing economic despondency and the rapidly approaching final Brexit period.
The Canadian dollar approached an eight-month high of the last week, as the Bank of Canada showed no signs that it would support the potential reduction in interest rates by the Fed, indicating that it does not intend to soften its monetary policy.
The Canadian dollar is trading at 1.3052, not far from the 1.3038 level reached a week ago.
Forex trading recommendations:
USDCAD: Buy. Entry point – 1, 3056. Take Profit – 1, 3072. Stop Loss – 1, 3028.
AUDUSD: Sell. Entry point – 0, 6974. Take Profit – 0, 6959. Stop Loss – 0, 7000.
USDCHF: Sell. Entry point – 0, 9861. Take Profit – 0, 9842. Stop Loss – 0, 9893.