Dollar Surges After Powell's Speech - Time for a Reversal?

After a slow start to the week, the markets are thriving after Powell’s speech earlier today. The Dollar is up 0.73% for the day and is expected to push higher.

Powell’s speech hinted at the further reopening of the US economy which would lead to a short-term increase in inflation. These comments match well with the decreasing Covid-19 cases and record-breaking vaccinations completed in the US. Powell also noted that this surge in inflation would most likely not lead to any interest rate hikes.

So what does this all mean for the Dollar? In an optimistic sense, traders could potentially see a reversal in the Dollar up to the highs made before the pandemic. As spring and summer roll around, consumer spending and travel should further stimulate the economy. A pessimistic lens may see this as a minor pullback before the Dollar dips lower. The latter is far less likely in the grand scheme of things.

The Dollar isn’t finished just yet as we have the Non-Farm Payroll release tomorrow. The current forecasts are expecting positive job numbers and this may be the final push the Dollar needs to solidify a complete reversal.