On Thursday, the US dollar surged after Federal Reserve Chair Jerome Powell reiterated that it would continue raising interest rates to control rising inflation. He also warned against prematurely loosening monetary policy. Notably, the European Central Bank had raised interest rates by 75 basis points. The euro initially rose against the dollar but weakened after Powell’s comments.

During the Cato Institute conference, Powell said that the Fed is strongly committed to bringing inflation down and needs to keep going for the same. It is mandated by Congress to maintain price stability and employment.
In midmorning trading, the dollar surged 0.3% to 144.13 yen. On Tuesday, it rose to a 24-year peak of 144.99 yen. The dollar index (DXY) was up 0.2% at 109.90 after rising to its strongest level since June 2002, the day before. On the other hand, the euro dropped 0.4% to USD 0.9966 EUR=EBS.

The ECB stated that it is likely to continue raising rates to dampen demand, prioritizing the fight against inflation even as the eurozone heads toward a likely winter recession.