August 29, 2022 12:07 AM ET
By: AnalysisWatch
Early Monday morning in Europe, EUR/USD took offers to renew the lows of around 0.9925. In doing so, the major currency pair respects the generally firmer US Dollar Index (DXY) amid hawkish calls from the US Federal Reserve (Fed) during a quiet session.
The US Dollar Index (DXY) rose 0.50% to 109.35, its highest level since September 2002, as US Treasury yields rose after Fed Chairman Jerome Powell defied market expectations by speaking cautiously at the annual Jackson Hole symposium.
Not only Fed Chairman Powell's vehement defense of the Fed's aggressive monetary policy but also fears of a recession and the Sino-American dispute have bolstered demand for the U.S. dollar as a safe haven, especially since Beijing and Washington recently sparred over U.S. ships in the Taiwan Strait.
The worsening energy crisis in the eurozone and doubts about the ability of global central banks to overcome recession worries, as outlined in the Jackson Hole study, underscore risk-off sentiment.
Yields on 10-year U.S. Treasuries rose nine basis points to 3.123% at last count, while S&P 500 futures fell 0.80% on the day, reflecting Friday's weak performance on Wall Street.
News that Germany's ruling SPD party will propose further measures to mitigate the impact of rising energy prices on citizens, according to Reuters, also seemed to challenge EUR/USD bears. Aggressive comments from European Central Bank (ECB) policymakers in Jackson Hole were in the same vein. Among them were ECB Executive Board member Isabel Schnabel, French central bank chief Francois Villeroy de Galhau, and Latvian central bank governor Martins Kazaks, all of whom argued for forceful or significant policy action, Reuters reports.
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