Forex Today: Fed's Powell saves stocks, sinks dollar, focus shifts to stimulus

Here is what you need to know on Wednesday, February 24: 

The market mood is mixed on Wednesday after a turbulent Tuesday – the Fed's Powell soothed markets by promising support, weighing on yields and the dollar. Bitcoin's whipsaw continues, a delay in Europe's vaccines, another appearance by Powell and fiscal stimulus talks are eyed.

Federal Reserve Chair Jerome Powell told Congress that the outlook has improved but there is still a long road to recovery. He reiterated that any rise in inflation will likely be transitory and that the Fed has tools to deal with it. On fiscal stimulus, Powell said that he does not see how a burst in spending would lead to higher inflation. 

His words sent stocks bouncing from the abyss, with the S&P 500 closing higher on the day. The benchmark ten-year bond yields retreated from 1.40% and pushed the dollar further down. Powell returns to Capitol Hill on Wednesday. Lael Brainard and Richard of the Fed will also be speaking. 

See Dollar tumbles as Powell says no rate hike, no taper

Fiscal stimulus: Democrats are set to bring President Joe Biden's $1.9 trillion stimulus plan to vote in the House on Friday, a significant step forward. 

Bitcoin is changing hands around $50,000 after a whipsaw earlier this week. The cryptocurrency's decline from the highs decreased the fortunes of Tesla founder Elon Musk. Ark Investment Management's Cathie Wood noted that they fall to $46,000 is a healthy correction. 

More Cryptocurrencies Price Prediction: Cardano, Ethereum & Dogecoin – Asian Wrap 24 Feb

GBP/USD stands out with a surge above 1.42, buoyed by dollar weakness and also speculation that the Bank of England would raise rates sooner rather than later. BOE Governor Andrew Bailey and several of his colleagues will speak on Wednesday. Moreover, the British media reports that the UK may exit the lockdown sooner than the current end date of June 21. 

EUR/USD has been lagging behind its peers, partially due to prospects of extended lockdown measures in Germany and AstraZeneca's announcement of yet another cut in AstraZeneca's delivery of vaccines to the old continent. The firm slashed by half its provisions for the second quarter, from 180 to 90 million doses. 

NZD/USD advanced above 0.7350 after the Reserve Bank of New Zealand left its rates unchanged as expected. Governor Adrian Orr noted that the kiwi would be higher if not for the RBNZ's actions. 

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