Euro dives, dollar rises after Fed's Powell reaffirms hawkish stance

* Dollar up on hawkish comments from Powell at ECB forum in Sintra

* Japanese yen climbs to highest level vs euro since 1998

* Swiss franc touches highest level against the euro since March

By Hannah Lang

WASHINGTON, June 29 (Reuters) - The euro fell and the dollar rose on Wednesday after U.S. Federal Reserve Chairman Jerome Powell said the biggest risk to the U.S. economy is persistent inflation and not that interest rate hikes will slow the economy too much.

Speaking at the European Central Bank Forum in Sintra, Portugal, Powell noted that engineering policy tightening to avoid a U.S. recession is certainly possible but not guaranteed.

"Powell, to me, sounded quite hawkish. He was talking about wanting to preempt or get ahead of any deanchoring or unwanted rise in inflation expectations," said Erik Nelson, a currency strategist at Wells Fargo in New York.

"I think that's maybe a bit of a departure from the perception of the market in the past few months that they would react to higher inflation expectations, and it seems if anything that they're going to be proactive rather than reactive."

The dollar index =USD , which measures the greenback against six currencies, ticked up 0.593% to 105.070 as investors sought safety in U.S. assets with stocks falling globally on the mounting risk of recession. The dollar index stayed, however, below the two-decade high of 105.79 struck two weeks ago.

The Japanese yen JPY=EBS climbed to 137.0 against the euro, its highest level since 1998, before paring gains. The Japanese yen JPY= weakened 0.29% to 136.55 per dollar.

The latest moves indicate "a very strong bias to sell the yen," said Nelson. "It all boils down to the Bank of Japan being the only central bank that's not tightening."

The euro was last down 0.74% at $1.044. The ECB is widely expected to raise interest rates in July for the first time in a decade, following its global peers, to cool accelerating inflation. Economists are divided on the magnitude of any hike, giving investors pause.

Lagarde said on Wednesday the era of ultra low inflation that preceded the pandemic is unlikely to return, and that central banks need to adjust to significantly higher price growth expectations.

Elsewhere, the Swiss franc EURCHF= peaked at 1.0034 versus the euro, the highest level against the single currency since 2015. It was last up 0.96% at 1.0024.

Cash held overnight by the Swiss National Bank fell last week by its largest amount in more than a decade, in a sign of the end of the central bank's forex purchase campaign to weaken the Swiss franc.

In crytocurrencies, bitcoin BTC= last fell 0.72% to $20,107.70.

Ethereum ETH= ETH=BTSP last fell 4.39% to $1,109.25. ========================================================

Currency bid prices at 3:28PM (1928 GMT) Description



U.S. Close Pct Change


High Bid

Low Bid




Dollar index






+105.1500 +104.3500 Euro/Dollar







+$1.0435 Dollar/Yen






+136.9950 +135.7750 Euro/Yen






+143.8500 +142.4900 Dollar/Swiss







+0.9495 Sterling/Dollar GBP=D3






+$1.2106 Dollar/Canadian CAD=D3






+1.2844 Aussie/Dollar







+$0.6862 Euro/Swiss







+0.9966 Euro/Sterling







+0.8604 NZ







+$0.6207 Dollar/Dollar








+9.7880 Euro/Norway







+10.2976 Dollar/Sweden







+10.1401 Euro/Sweden








World FX rates Link

Reporting by Hannah Lang in Washington; additional reporting by Joice Alves; editing by Bradley Perrett,
Mark Heinrich David Evans and Richard Chang

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