US stocks sell off after Fed chief Powell signals more rate hikes in order to tame inflation. Yesterday in First address to to US Congress Fed Chairman Jerome Powell gave out more details on the Fed’s expectations for economic growth and accordingly monetary policy.

Powell outlined that the Fed expects inflation to continue to move to target, based on data seen. Consequently more than 3 rate hikes could materialise this year as the Cebtral Bank attempts to manage any possible over heating in the economy.

US treasuries rose following Jerome Powell’s comments with the 10 year treasury note rising to 2.915 %. Rising yields support the respective currency, in this case the USD and in fact the USD had a higher close yesterday as it wrapped up a positive session managing once again 90 levels on the US dollar index (DXY). We will know have to see if the USD manages to hold these levels.

EURUSD is currently at 1.2222 after an 84 pip decline yesterday. With USD-strength follow through we are expecting further declines towards 1.2188 levels as long as 1.2267/1.2290 offers resistance. However keep a watchful eye as a recovery is expected after thid decline. Follow our tradertip on