USD continues to consolidate broadly ahead of Fed Chairman Powell’s semi-annual congressional testimony to a House panel. Shaun Osborne, Chief FX Strategist at Scotiabank, analyzes the greenback outlook.

Dovish comments from Powell will weigh on the USD

The USD will be affected by the risk channel as much as the yield/spreads channel – a pop in stocks behind dovish comments from Powell will weigh on the USD while hawkish remarks which way on stocks will do the reverse. 

Scope for deeper gains in the USD remains limited at the moment as investors mull the outlook for US rate policy, I think and DXY weakness below 102.50 intraday support should signal a renewed downturn in the USD generally.