The USD has been rising against the JPY and the GBP for the majority of the session and reversed early losses against the Euro after Fed Chairman Ben Bernanke began his testimony before the Joint Economic Committee of Congress. Federal Reserve Chairman Ben Bernanke on Wednesday downplayed speculation that the central bank is planning to taper its $85 billion monthly bond buying program. The economic recovery remains too fragile to proceed without extraordinary support from the Fed in light of fiscal restraint and headwinds from Europe, Bernanke said in semi-annual testimony before the Joint Economic Committee. “A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further,” Bernanke told lawmakers. He assured that policy makers are ready to scale back the QE3 program if presented with data showing sustainable improvement in the labor market. “The key to this program is the data,” Bernanke said. St. Louis Fed President James Bullard and New York Fed President William Dudley said Tuesday that there is no case yet for curtailing bond purchases, given low inflation and mixed signals for growth prospects. The dollar fell to a low of $1.2997 against the Euro on Wednesday, but has since sharply reversed to around $1.2845.
