Dollar drops to near six-week low as investors turn to Fed’s Powell

The dollar fell near a six-week low on Tuesday, while commodity currencies hovered near multi-year highs as traders focused on how Fed Chair Jerome Powell will respond to hopes for resurgent inflation.

The dollar index traded at 90.019 on Tuesday, just above the lowest level hit in mid-January. The Aussie bought $0.7913 and the kiwi stood at $0.7323, both trading steadily in Asia.

Investors are expecting Federal Reserve Chairman Jerome Powell to give reassurance that the central bank will tolerate higher inflation without instantly raising rates. 

The euro slightly rose to $1.2165 and expected to re-test resistance around $1.2220. The pound, which rallied almost 3% this year, stood at $1.4067.

The Japanese yen, which has performed the worst so far in 2021, steadied at 105.02 against the dollar.