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Dollar on the back foot ahead of Powell

Dollar on the back foot ahead of Powell

The greenback continues to retreat against the major rivals on Tuesday. EURUSD pair jumped to April 18 highs around 1.1275, where the 100-DMA lies.

The pair sees the third day of gains as the selling pressure around the common currency has eased after it found a bottom marginally above the 1.11 handle earlier last month.

The negative pressure on the dollar rose after yesterday’s dovish comments from Bullard. The Fed official said that interest rate cut “may be warranted soon” given the rising risk to economic growth posed by global trade tensions as well as weak US inflation. Against this backdrop, traders rushed to sell the greenback as the central bank signaled it could change its stance on rates.

Now, market participants are waiting for Powell’s testimony due later today. Should his tone come as more neutral, the dollar could switch into a recovery mode on signs of relief. Besides, the downside potential in the US currency could be limited by the persistent risk aversion. In this scenario, EURUSD may retreat from the current levels and get back below 1.1240.