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Dollar falls slightly as boost from Powell comments fades

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By Chuck Mikolajczak

NEW YORK, March 22 (Reuters) – The dollar fell slightly on Tuesday as momentum faded from comments by U.S. Federal Reserve Chairman Jerome Powell that lifted the currency in the previous session and as a rise in equity markets helped boost risk sentiment.

* The US currency on Monday saw its biggest daily percentage gain since March 10, when Powell opened the door for rate hikes of more than 25 basis points at upcoming policy meetings to fight inflation.

* On Tuesday, St. Louis Fed Chief James Bullard reiterated on Bloomberg TV his call for the central bank to act aggressively.

* Meanwhile, San Francisco Fed President Mary Daly said she believes the main risk to the economy is a worsening of already high inflation as oil prices rise due to the conflict in Ukraine and a disruption in supply chains due to China’s countermeasures against COVID-19.

* Traders are pricing in a 61.6% chance of a 50 basis point hike at the Fed’s May meeting, according to CME’s FedWatch tool, up from just over 50% a week ago.

* The dollar index fell a slight 0.06%.

* Meanwhile, the yen continued its recent weakness as the Bank of Japan renewed its stance of keeping its ultra-loose monetary policy intact.

* The Japanese currency hit a six-year low of 121.03 per dollar, before trading down 1.05% at 120.72 yen.

* The yen also suffered against other currencies. The euro hit a five-month high at 133.33 yen, before rising 1.2% to 133.17 yen. In addition, the Japanese currency plunged to a low of more than six and a half years against the Swiss franc.

* Meanwhile, the euro rose 0.13% to $1.1028.

(Reporting by Chuck Mikolajczak, edited in Spanish by Manuel Farías)

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