DOLLAR EASES AS POWELL BUMP FADES

• On Tuesday, the yen dropped below the critical 120 level for the first time since 2016, after Federal Reserve Chair Jerome Powell's hawkish speech increased bets on rising US interest rates and widened the policy gap with a dovish Bank of Japan.

• The dollar fell on Tuesday after rising the previous day, as comments from US Federal Reserve Chair Jerome Powell faded and stock markets rose, boosting risk-on mood.

  

On Monday, the dollar witnessed its greatest one-day percentage rise since March 10 as Powell hinted at hiking rates by more than 25 basis points at forthcoming policy meetings to battle inflation. According to CME's FedWatch Tool, traders are pricing in a 66.1% likelihood of a 50 basis point raise at the Fed's May meeting, up from slightly more than 50% a week earlier.

Following Powell's remarks, Goldman Sachs now expects the Fed to increase interest rates by 50 points at its May and June meetings.

Investors were in a risk-on attitude as U.S. stocks gained, denting some of the greenback's safe-haven appeal, with equities benefiting, in part, from bank shares on Fed rate rise forecasts.

“For the dollar, it is well supported by the Fed's increasingly hawkish rate stance,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, DC. “But it is off its peaks, risk appetite has something to do with that, with stocks higher that is kind of tempering the dollar's gains.”

At least for the time being, it appears that the market is giving the Fed the benefit of the doubt that it can promote a gentle landing, which is supporting risk appetite and limiting dollar gains. The dollar index dropped 0.063%.

The yen's recent depreciation continued as the Bank of Japan reiterated its commitment to maintaining its ultra-easy monetary policy.

The yen fell to a new six-year low of 121.03 per dollar and was last down 1.03%against the greenback at 120.70 per dollar.

The yen also fell against the other currencies, with the euro reaching a five-month peak of 133.33 and closing 1.18% higher at $133.14. The yen fell to a more than 6-1/2-year low versus the Swiss franc at 128.91, while the franc rose 1.48% to $128.89. The euro increased 0.14% to $1.1029. The euro has depreciated over the last month as the war in Ukraine has worsened, rising energy costs. On Monday, European Central Bank (ECB) President Christine Lagarde stated that the Fed and ECB will be out of sync due to the conflict in Ukraine's differing effects on their respective economies.

On Tuesday, ECB policymaker Francois Villeroy de Galhau stated that the central bank must look beyond short-term fluctuations in energy costs and focus on underlying inflation trends.

The British pound was last trading at $1.3249, up 0.64% on the day.

Bitcoin yesterday increased 4.18% to $42,874.48 in cryptocurrencies.

Last night, Ethereum gained 3.63% to $3,015.46.

With ONSTON/USDT being the top gainer in cryptocurrency.