US dollar, Bitcoin recover, gold pauses ahead of Jerome Powell’s testimony

The upbeat market mood from the US last session extends into Tuesday, as the Asian stocks rebound from monthly lows amid easing Fed’s tightening fears. Fed policymakers James Bullard and Robert Kaplan tempered FOMC’s hawkish rhetoric, as they felt that the economic recovery still has room to improve.

Meanwhile, Fed Chair Jerome Powell, in the prepared remarks of his testimony before the House Select Subcommittee on the Coronavirus Crisis, said inflation had accelerated but should move back toward the central bank’s 2% target once supply imbalances resolve.

The US dollar extends the bounce after witnessing a sharp corrective pullback on Monday. Meanwhile, the Treasury yields continue to hold the higher ground, as investors rethink the Fed’s monetary policy stance. The renewed expectations over a potential US infrastructure stimulus deal also adds to the market’s optimism.

Within the G10 fx basket, AUD//USD remains the main laggard, as it edges lower towards 0.7500. USD/JPY holds the higher ground near 110.00 while USD/CAD remains capped below 1.2400 amid rising oil prices. Brent oil topped $75 for the first time in two years.

EUR/USD is defending 1.1900 ahead ECB-speak and Eurozone Consumer Confidence data. GBP/USD is battling 1.3900 after stalled Monday’s impressive recovery amid looming concerns over Brexit and Delta covid strain. Meanwhile, Britain began negotiations to join the trans-Pacific trade deal.

Gold is consolidating its recovery below $1890, as higher US dollar and yields limit the upside. The focus now remains on Powell’s Q&A session during his testimony later on Tuesday.

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