FX round-up: US dollar bounces back after policymakers´ remarks

Dollar strength was the main feature of Monday´s session as two - if not three - Fed speakers weighed in with somewhat 'hawkish' remarks.

To take note of, on 17 March a key technical indicator for Bloomberg´s US dollar index, known as the relative strength index, fell to its lowest since mid-2012, potentially indicating that on an extremely short-term horizon the Greenback had reached what traders term 'oversold' conditions.

Sterling was particularly hard hit, with cable surrendering 0.78% to end the session at 1.4366.

Speaking in the afternoon, the president of the US Federal Reserve bank of Atlanta, Dennis Lockhart, said another interest rate hike might be on the cards at one of the next meetings "possibly as early as the meeting scheduled for end of April".

His remarks echoed those of San Francisco Fed president John Williams, on Friday, in an interview with Market News International.

Leaning in the same direction to an extent, Richmond Fed president said that upside risks to price stability had increased, perhaps "not significantly" but "I think noticeably and I think materially".

The other main currency pairs were also dragged lower as a result, with euro/dollar slipping 0.31% to 1.1235 and dollar/yen gaining 0.53% to 112.148.

Euro was also undermined by ECB governing council member Erkki Liikanen, who told an audience that the monetary authority was not out of tools to prop up growth, including via further cuts to interest rates.

"The monetary policy measures and forward guidance [announced by the ECB on 10 March] together constitute a comprehensive response. The new measures will accelerate the return of inflation to levels below but close to 2%, and support the recovery of the euro area economy," Liikanen said.