The broad-based US Dollar Index, which measures the greenback strength against a basket of six major currencies slipped as Powell ruled out an immediate rate hike.
On Thursday, U.S. Federal Reserve Chairman Jerome Powell struck a dovish tone after affirming his commitment to keeping interest rates low for the foreseeable future even as he expressed hope for a strong economic recovery.
“When the time comes to raise interest rates, we’ll certainly do that, and that time, by the way, is no time soon,” Powell said during a Q&A session presented by Princeton University.
However, the greenback managed to recoup those losses and strengthen after President-elect Joe Biden spoke to the nation Thursday (U.S. time), addressing the COVID-19 pandemic and the economy, and unveiled a two-step recovery plan that will cost $US1.9 trillion ($2.44 trillion).
Called the “American Rescue Plan”, the legislative proposal would meet Biden’s goal of administering 100 million vaccines by his administration’s 100th day.
Meanwhile, the Eurodollar hit a fresh 1-month low at 1.2110 before short-term profit-takers emerged.
On the data front, U.S. jobless claims data showed that 965,000 people applied for unemployment insurance for the week that ended on Saturday, representing the biggest surge since March and the highest level since August.
The forecast expected 800,000 jobless claims for the week.
Viewing the technical standpoint, the Relative Strength Index (RSI) 3-day ‘lookback’, holds beneath the 50-midway point, while the Moving Average Convergence Divergence (MACD) is beneath the 0.00 axis and is married up to the RSI to support a bearish signal.
From the recent break of 1.2225 has reopened the downside and exposes the 1.1990-1.2010 region.