US Dollar Weakens on US Trade Tariffs & Jerome Powell Testimony

The US dollar was moving up during the Thursday trading session but has lost its gains against basically all of its most-traded peers. There were two likely reasons for that: the announcement of US import tariffs and disappointment in the second testimony of the new Federal Reserve leader Jerome Powell.

US President Donald Trump announced that the United States are going to impose duties of 25% on steel and 10% aluminum, saying that such move should protect domestic producers. China threatened to retaliate in response, reducing imports from the USA, and the EU said it considers doing the same. The potential trade wars can hurt the US economy, the agricultural sector in particular.

Powell delivered a second testimony today, this time to the Senate Banking Committee. Markets considered the speech to be more dovish than the one he delivered on Tuesday as the Chairman voiced concern about inflation. He said that “inflation has been low and stable”, though he also stated that ultimately “some of the shortfall in inflation last year as likely reflecting transitory influences that we do not expect will repeat.”

EUR/USD rallied from 1.2193 to 1.2269 as of 22:43 GMT today, bouncing from the daily low of 1.2160. GBP/USD traded at 1.3771 after opening at 1.3758 and falling to the daily low of 1.3711. USD/JPY was at about 106.17, retreating from the opening level of 106.65 and the session high of 107.19.

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