By Peter Nurse
Investing.com – The U.S. dollar edged lower in early European trade Monday, with a testimony by Federal Reserve Chair to U.S. Congress prompting caution at the start of the week.
At 03:00 ET (08:00 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 104.403, having last week recorded a weekly loss for the first time since January.
Recent comments from Fed policymakers have pointed to more interest rate increases to combat proving to be stickier than expected.
This continued over the weekend, with San Francisco Federal Reserve Bank President stating that “in order to put this episode of high inflation behind us, further policy tightening, maintained for a longer time, will likely be necessary.”
Richmond Federal Reserve Bank President said on Friday that he could envision a scenario where the pushes the U.S. benchmark policy interest rate to the 5.5%-5.75% range, a full percentage point above the current range.
This brings the focus squarely on to Powell, who will present the Fed’s semi-annual monetary policy report to the Senate on Tuesday and the House of Representatives on Wednesday.
Traders are currently fretting that Powell may seek to temper these hawkish expectations of a potential large hike later this month.
The Fed slowed the pace of rate hikes to 25 basis points at its last meeting on Feb. 1, after a 50-basis-point increase in December that came in the wake of four consecutive 75-basis-point increases.
Elsewhere, rose 0.2% to 1.0653, having gained 0.8% last week after European Central Bank President indicated that the central bank’s interest rate increases may need to continue beyond March’s 50-basis-point planned move.
Eurozone for January are due for release later in the session and are expected to show growth of 1.0% on the month, an improvement from the 2.7% slump the prior month.
rose 0.1% to 6.9174, with the yuan slipping after the Chinese government announced a 2023 GDP target of 5% over the weekend, a more cautious stance by Beijing over an economic recovery this year than expected.
edged lower to 1.2037, fell 0.2% to 0.6754, while fell 0.1% to 135.69, ahead of the on Thursday, where the bank is widely expected to hold at record lows.