Powell's comments hurt the Euro

The dollar bounced back strongly against the Euro in yesterday’s trading session after U.S. Federal Reserve officials including Fed Chair Jerome Powell said on Thursday, they are still not sure that interest rates are high enough to finish the battle with inflation, with Powell cautioning that the Fed may need a little further help in bringing down prices.

The US central bank is still some way off reaching their 2 percent inflation target and Mr Powell hinted that another rate hike may be the only way to help achieve the objectives.

The Fed "is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time. We are not confident that we have achieved such a stance. If it becomes appropriate to tighten policy further, we will not hesitate to do so." Mr Powell said at an International Monetary Fund event.

Interim St. Louis Fed President Kathleen O’Neill Paese also added her voice on the need for further possible rate rises and noted that although the cpi figures have been on a downward protectory, now is not the time for complacency as inflation could once again rear its ugly head.

"It would be unwise to suggest that further rate hikes are off the table, there is considerable economic uncertainty at the present time. There are reasons inflation could surprise to the upside." She noted at an event in Indiana.

Fed funds futures traders are now pricing in a 25% chance of an additional hike by January, up from 19% on Thursday morning but down from 28% a week ago, according to the CME Group’s FedWatch Tool.

Looking further ahead today, the main drivers of the EUR/USD currency pair will be the release of a monetary speech from European Central bank boss Christine Lagarde with market participants keeping an eye out for any clues on any possible further rate hikes to be delivered before the end of the year.

To finish off the trading week traders will pay attention to the release of the Michigan consumer sediment index from the US which tends to create a few opportunities in the currency pair.