The dollar strengthened versus a group of significant competitors in European trade on Friday for the second day in a row, reaching five-week highs and heading into its second consecutive week of gains.
Investors are currently anticipating Fed Chair Jerome Powell's significant speech later today, which is anticipated to contain hints about the direction of US interest rates.
The Index
The dollar index closed yesterday up 0.6%, the biggest gain since February 13, following the Swiss National Bank's surprise move to decrease interest rates by 25 basis points. It jumped 0.45% to 104.45, the highest since February 16, with a session low at 103.92.
The decision was made as February's inflation rate in Switzerland was 1.2%, marking the ninth consecutive month with inflation below 2%.
The Fed
For the fifth consecutive meeting, the Federal Reserve kept interest rates at their 2002 high of 5.5%, as anticipated.
According to the Fed, recent indices demonstrated that the US economy is currently performing well, with significant job gains and declining—though still high—inflation.
Fed Chair Jerome Powell stated that although inflation is moderating, it is still above the 2% target and that the FOMC members are dedicated to achieving this goal.
He continued by saying that the Fed is keeping an eye on US inflation, which is still high, and that February's higher-than-expected inflation did not alter the Fed's outlook.
In the event that the US economy outperformed forecast, he continued, it might be prudent to begin rate reductions this year.
US Exchange Rates
The likelihood of a 0.25% interest rate drop in June increased to 75% after the Fed's meeting.
Powell
Markets are currently awaiting Fed Chair Jerome Powell's significant speech later today, which is anticipated to provide further insight into the probable future direction of US interest rates.
