FX Roundup: Dollar slips further as Yellen testimony continues

The dollar endured another torrid session against the yen on Thursday, as US Federal Reserve Chairwoman Janet Yellen’s testimony to Congress neared its end.

In her remarks late into the European trading session, Yellen said there was a “chance” of a recession as financial conditions worsen abroad. Speaking to the Senate Banking Committee, the Fed Chair also said the global selloff could impact growth in the US economy.

"There is always some chance of recession in any year," she said. "But the evidence suggests that expansions don't die of old age."

At 1723 GMT, the dollar was down 1.31% against yen changing hands at JPY111.87. Meanwhile the euro was up 0.60% against the greenback exchanging at $1.1360, while the pound was 0.40% lower at $1.4464.

Kit Juckes, head of forex at Societe Generale, said, “The way USD/JPY trades - spiking lower before being dragged back up by the Bank of Japan - means that momentum indicators like relative Strength Indicators (RSI's) are useful tools to get a sense of when the move is going too far, or when momentum is picking up/fading.

“When the RSI peaked and started falling at the start of this month was a very good signal to buy the yen, and on the converse, the RSI is now approaching levels last seen as we spiked down to USD/JPY 116 in January. This move in the yen may now be going dangerously quickly and when momentum slows, it will be time to take profits on yen longs, at least temporarily.”

Elsewhere, the Australian dollar fell a nominal 0.02% against the greenback exchanging at US$0.7094, as did the New Zealand exchanging at US$0.6685. The greenback rose 0.15% against the Canadian dollar exchanging at CAD$1.3947.

The dollar’s rise was echoed in Latin America, with the greenback up against major regional crosses, including the Chilean (up 0.12%), Colombian (up 1.58%), Mexican (up 1.35%) pesos and the Brazilian real (up 1.15%).