Dollar rebounded as those who were looking for clues on negative rates were left disappointed.
Fed's Powell caused a bit of volatility in the markets when he delivered remarks on the economy and monetary policy outlook earlier. The Chairman sounded dovish as you would expect, saying the Fed may have to "do more" as the economic recovery could take longer than expected. This initially caused the dollar to weaken. However, on negative rates, he said it is not something they are looking at. Consequently, the dollar rebounded again as those who were looking for clues on negative rates were left disappointed.
The dollar looked particularly strong against the pound, which has been struggling over the past few days against a number of foreign currencies because of the economic troubles here in the UK and the lockdown remaining in place longer than expected. Meanwhile the euro has tried to put in a base against the dollar, but with the economic troubles in the euro area and the potential for risk aversion to make a comeback, means the EUR/USD could break lower again.
At the time of writing, the EUR/USD had come off key resistance around 1.0885, but its short-term higher highs series had not yet broken. But if THIS most recent short-term low at 1.0830 breaks and there is acceptance below this level, then we could see the onset of another leg lower in the EUR/USD:
Source: TradingView and ThinkMarkets