At the ECB Forum yesterday, Fed Chair Jerome Powell confirmed the possibility of two more rate hikes this year.

The central bank leaders, including Fed Chair Jerome Powell, spoke hawkish at the ECB Forum in Portugal yesterday. As a result, the US Dollar Index (DXY) has been consistently gaining for the past two days, reaching a high of 103.40s today (29/June).

USD Index

During the event, Fed Chair Jerome Powell confirmed that the Federal Reserve is considering raising interest rates twice more in the remaining part of this year. Powell's statement swiftly ignited a rally in the US dollar, particularly against the pound sterling, Australian dollar, and New Zealand dollar.

"Although policy is restrictive it may not be restrictive enough and it has not been restrictive for long enough," Powell said Wednesday during a panel hosted by the European Central Bank for a forum in Sintra, Portugal, cited by Bloomberg.

ECB President Christine Lagarde reaffirmed her commitment to raising interest rates in July, citing persistent high inflation expectations in the Eurozone. However, market participants had already priced in the assumption of a rate hike, resulting in no significant surprises from Lagarde's remarks. Consequently, the EUR/USD weakened and fell below the 1.0900 threshold in today's trading.

BoJ Governor Kazuo Ueda maintained his customary reluctance to raise interest rates, seemingly unconcerned about the yen's current weakness. As a result, the USD/JPY continued to surge, reaching a high of 144.90 today. Some analysts had previously cautioned that the BoJ might intervene if the USD/JPY breached the 145 level.

BoE Governor Andrew Bailey's stance was the most disappointing for market participants. While he expressed a willingness to raise interest rates, he dismissed the current expectations for a rate hike held by the market. Consequently, the pound sterling weakened against all other major currencies.

Overall, the news emerging from the ECB Forum positively impacted the US dollar. Additionally, the release of specific US economic data tonight supported the greenback.

The final report on US Gross Domestic Product (GDP) revealed a growth rate of 2.0% (quarter-over-quarter) in the first quarter, surpassing the consensus estimate of 1.4%. Furthermore, the number of jobless claims stood at only 239k, lower than the projected figure of 266k. These data allayed concerns in the market about the possibility of a recession in the United States.