The US dollar returned to stability after two Federal Reserve (Fed) policymakers said that a period of high inflation in the United States may last longer than expected.
Atlanta Fed President Raphael Bostic said that while growth is projected to rise 7% this year and inflation is above the Fed’s 2% target, he now expects interest rates to be raised by the end of 2022.
Bostic and his partner, Fed Governor Michelle Bowman told that while they agree the recent rise in inflation is only temporary, but they are also of the view that it may take longer to decline.
In the Asian session, the dollar index traded slightly higher around 91.85 against major competitors.
The US dollar has soared higher after the Fed shocked the market last week by saying that policymakers predicted two interest rate hikes in 2023.
However, Powell's testimony on Tuesday made USD trading slow again after he said that the central bank would not raise interest rates just out of fear of rising inflation.
In addition, the market was also marked by the publication of mixed manufacturing and services PMI data, with manufacturing activity reported to increase in June, while services declined.
Meanwhile looking at the euro, although PMI data readings from the European Zone were very encouraging with business activity soaring to a 15 -year high, the euro only recorded modest gains and ended lower against the USD in the previous session.
