The euro rose 0.45% against the dollar to $1.0944
On Thursday, Federal Reserve Chairman Jerome Powell said the Fed is “not far ” from having enough confidence that inflation is moving toward its 2% target to begin cutting interest rates. The dollar depreciated across the board.
The euro initially slumped as the ECB left interest rates unchanged despite recognizing the need to curb inflation, but has since recovered to hit its highest daily value against the US dollar in about a month. The common currency hit a six-week high against a generally weak dollar.
We are waiting to become more confident that inflation is moving sustainably to 2%. When we do get that confidence, and we’re not far from it, it will be appropriate to begin to dial back the level of restriction so that we don’t drive the economy into recession, Powell said in a hearing before the Senate Banking Committee.
Chairman Powell told lawmakers on Wednesday that rate cuts remained likely in the coming months, but only if further signs of falling inflation warranted.
Powell seemed more dovish today than he did yesterday, Marc Chandler, chief market strategist at Bannockburn Global Forex, said.
Investors’ growing appetite for riskier assets, including stocks, also weighed on the dollar, Chandler said.
The euro rose 0.45% against the dollar to $1.0944.
The European Central Bank cautiously laid the foundations for interest rate cuts later this year.
We are making good progress towards our inflation target and we are more confident as a result – but we are not sufficiently confident, ECB President Christine Lagarde told a press conference.
Policymakers did not discuss cuts at this meeting, but Lagarde said they had just begun discussing reversing their restrictive stance.
