DXY: Dollar Index Edges Higher After Fed’s Jay Powell Takes March Rate Cut Off the Table

Fed chief moved to cool the buzz about early rate trims, saying the central bank wanted more concrete proof inflation has been defeated.

• The dollar index DXY gained momentum in early Thursday deals as markets digested the latest from the Fed. Following a press conference by central bank boss Jay Powell, the greenback snapped back from weekly losses and shot up by 0.8%, hitting a session high of 103.80.
• Behind the move was shifting market sentiment over the keenly anticipated interest-rate cuts. In his speech on Wednesday, Powell cooled the hype around any policy reversal by saying a March cut was not the “base case” scenario. Analysts are now eyeing the June meeting for Fed officials to make their first trim to borrowing costs. That is, if inflation continues to cool.
• Powell’s words fueled traders’ bets on the dollar because higher rates generally mean a higher value of the local currency. With that said, the buck flexed against most major forex rivals. The EURUSD dived under $1.08 from $1.0880, and the GBPUSD slipped around 100 pips to settle near $1.2650.