The momentum of the greenback's rally was revived following the release of the FOMC meeting minutes and some US economic data. The US dollar index (DXY) reached its highest range in seven weeks at the 104.60s.

That was per New York session on Thursday (23/February). Meanwhile, the EUR/USD pair and GBP/USD continue to depreciate in the market so far. Minutes from the FOMC meeting of January 31-February 1 revealed something. 

It showed that all members agreed to a slowdown in the pace of the Fed's rate hike. At the same time, they stressed that the frequency and distance of future rate hikes will be determined by progress in efforts to limit rising inflation. 

The minutes as a whole provide no new hints that are more hawkish or dovish. However, the United States dollar rate was pulled back by the latest brilliance of United States economic data.

US GDP Rose by 2.7 Percent

The data said above was including a series of reports just announced yesterday night. Gross Domestic Product (GDP) data of the United States was recorded to grow only 2.7%.

That grow was for Quarter-over-Quarter in the fourth quarter of 2022. That number was actually lower than data from the previous period (3.2%) and consensus estimates (2.9%). 

However, the negative bias of the report is offset by labor market and inflation data that exceeded expectations. The Weekly jobless claims data shows an additional 192k.

That was only for the week ended February 18, 2023. That's less than the 195k increase in the previous period, while also being below the consensus estimate of 200k. 

Core PCE Growth Reached 4.7%

The Personal Consumption Expenditure (PCE) preliminer report shows inflationary pressures remain high. It can be seen from the Core PCE Price growth which was reaching 4.3% (Quarter-over-Quarter).

That number was much higher than the consensus estimate pegged at 3.9%. One of the main inflation references for the Fed was an increase of 4.7% in the previous quarter. 

Market participants now expect the Fed to raise rates by as much as 25 basis points in the next three FOMC meetings. Consequently, the USD is stronger against several other currencies.

It is especially the currencies that have lower interest rate and economic growth projections. Regardless, some major currencies display fierce resistance. 

Ueda Testimony is Awaited by Market Participants 

Based on a data, the AUD/USD and NZD/USD squirmed slightly at their respective support levels. The USD/JPY rally was also held at the 134.90s range that has been inhabited since yesterday. 

Market participants are now waiting for the testimony of BoJ Governor candidate Kazuo Ueda. Based on a rumor, He will give a statement before the Japanese Parliament on Friday and Monday.

Meanwhile, the minutes for the FOMC meeting earlier this year stated that policymakers agreed to tighten monetary policy further until inflation fell substantially. 

The Dollar Index rallied nearly 1 percent to a high position in 6 weeks after the release of the data. But in yesterday afternoon's trading (23/February), the price corrected 0.04% at the level of 104.45

Inflation Rates have Been Weakening Before

The minutes of the FOMC meeting observed very tight labor market conditions and high inflation. That is why; most members continued to anticipate further interest rate hikes. 

In this regard, the prospect of inflation remains an important key factor that will determine the direction of monetary policy. The inflation rates have been seen weakening over the past few months, 

However, the FOMC said once again that it has not been enough to confirm a sustained decline in the inflation trend. At its last meeting, the Fed raised the interest rate 25 bps.

In a more detail data, that was from 4.5 percent to 4.75 percent. Some other members are more willing for the Fed to raise interest rates by 50 bps to push restrictive policy as quickly as possible.