Dollar Rises To 3-month High As Powell's Testimony Raises Rate Hike Concerns

(RTTNews) - The U.S. dollar climbed to a three-month high on Tuesday, scoring strong gains against its major counterparts in the process, as Federal Reserve Chairman Jerome Powell said the central bank will likely raise rates more than previously expected to fight inflation.

Citing stubbornly elevated inflation and stronger than expected economic data, Powell said during his semiannual monetary policy testimony before the Senate Banking Committee that "ultimate level of interest rates is likely to be higher than previously anticipated."

Powell also said the Fed would be prepared to reaccelerate the pace of rate hikes if the totality of incoming data were to indicate that faster tightening is warranted.

Additionally, the Fed chief reiterated the central bank will likely need to maintain a restrictive stance of monetary policy for "some time" in order to restore price stability.

The Fed's next policy meeting is scheduled to take place later this month. CME Group's FedWatch Tool currently indicates a 70.5% chance of 50 basis point rate increase and a 29.5% chance of 25 basis point rate hike.

The dollar index rose to 105.65, the highest level since December 6, 2022, and was at 105.62 a little while ago, gaining about 1.22%.

Against the Euro, the dollar strengthened to 1.0550, gaining from 1.0686.

The dollar is trading at 1.1824 against Pound Sterling, firming from 1.2028.

Against the Japanese currency, the dollar is trading at 137.14 yen, up 0.89% from the previous close of 135.92 yen.

The dollar is at 0.6588 against the Aussie, rising more than 2% from 0.6730.

Against Swiss franc, the dollar has firmed to CHF 0.9422 from CHF 0.9307.

The dollar is up sharply against the Loonie as well, gaining more than 1% at C$ 1.3755.