Fed Chairman Jerome Powell delivered testimony that was somewhat disappointing in the eyes of some market participants, triggering a sell-off in the US dollar.

The US dollar exchange rate collapsed against all other majors in New York session trading on Wednesday (6/March). The US Dollar Index (DXY) has fallen nearly 0.5% to 103.30 at the time of writing. This is because Fed Chairman Jerome Powell delivered a somewhat disappointing testimony in the eyes of some market participants.

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Jerome Powell said that progress towards the inflation target is "not assured" but that his central bank will still cut interest rates this year, especially if economic data improves broadly.

"If the economy develops broadly as expected, it will likely be appropriate to begin easing policy restraints at some point this year," Powell said in a prepared speech to the US House Financial Services Committee.

Matt Weller, head of market research at StoneX, thinks Jerome Powell is just rehashing key points that have been repeatedly expressed before. However, Powell disappointed some traders who have recently started speculating on the possibility that the Fed will not cut interest rates in the first half of this year. Consequently, according to Weller, many traders closed bullish positions on the US dollar that had been opened over the past few weeks.

EUR/USD broke through the one-month high threshold to 1.0908. GBP/USD also rallied around 0.3% to a one-month high of 1.2748. AUD/USD briefly jumped around 1%, followed by NZD/USD by 0.7%. Meanwhile, USD/JPY weakened further by around 0.5% to 149.25. 

The release of ADP data also hit the greenback this evening, which missed estimates. ADP reported that the number of non-farm private payrolls only increased by 140k in February 2024, whereas the consensus expected 149k. This figure is a bad sign ahead of Friday's Nonfarm Payroll data release.