US dollar, yields fall amid Fed Powell testimony as traders flock to gold, BTC
Fed Powell: interest rate cuts likely, "this year"
EUR/USD above 1.0900; AUD/USD nears 0.6600
Following Fed Chair Powell's comments, the US dollar experienced a decline, dropping more than 50 pips against major currencies such as the Australian dollar and the euro. Specifically, EUR/USD soared above 1.0900, while the AUD/USD approached the 0.6600 mark. This weakening of the USD on Powell's dovish tone underscores the currency's sensitivity to shifts in monetary policy outlooks.
US yields decline toward 4.0%
US Treasury yields, historically aligned with the Federal Reserve's interest rate movements, are now trending lower toward the 4.0% threshold. This decline reflects market expectations for the forthcoming rate cuts promised by Powell, as yields inversely react to the anticipated easing of monetary policy. Lower yields and the prospect of reduced rates could influence various sectors of the economy, particularly in terms of borrowing costs and investment returns.
Gold prices rise to new all-time high above $2,150
In response to Powell's testimony and the expected shift in Federal Reserve policy, gold prices surged to a new all-time high, exceeding $2,150. Given gold's historical negative correlation with interest rates, this uptick aligns with investor behavior during periods of reduced rates, where gold (a non-interest-bearing asset) often serves as a hedge against currency devaluation and inflation risks.
BTC rallies back to $67,000; ETH hits $3,800
The cryptocurrency market has also reacted positively to the anticipated changes in Federal Reserve policy, with Bitcoin rallying back to $67,000 and Ethereum reaching $3,800. This resurgence highlights cryptocurrencies as beneficiaries of expansionary monetary policies, as investors are more incentivized to seek alternative assets amidst expectations of lower interest rates and potential inflationary pressures.
How to trade US dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex broker like tastyfx. Many traders watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.
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