The U.S. dollar pared early gains, and after a brief spell around the flat line, rallied again Thursday afternoon but retreated again in the final minutes of the session, looking for direction.

The dollar’s early strength was due largely to the Federal Reserve Chairman Jerome Powell comments that the central bank will use its full toolkit to support the economy, but rejected any possibility of negative interest rates. He also said the economy is likely to see a prolonged downturn and urged the U.S. Congress to come out with measures to help limit the damage inflicted by COVID-19.

“The committee’s view on negative rates really has not changed. This is not something we’re looking at,” Powell said in a speech at the Peterson Institute for International Economics.

The Fed Chair warned of a prolonged recession from the viral outbreak, significantly worse than any recession since World War II.

The path ahead is both highly uncertain and subject to significant downside risks, he added.

The Labor Department’s report showed a continued decline in first-time claims for U.S. unemployment benefits in the week ended May 9th, but the number of new claims still came in well above economist estimates.

The report said initial jobless claims fell to 2.981 million, a decrease of 195,000 from the previous week’s revised level of 3.176 million.

Economists had expected jobless claims to tumble to 2.5 million from the 3.169 million originally reported for the previous week.

The dollar index, which rose to 100.56 and slipped to 100.25, was last seen at 100.31, up marginally from previous close.

Against the Euro, the dollar was stronger at $1.0802, after easing to $1.0826 earlier in the day.

The Pound Sterling was just slightly weak at $1.2230, recovering well from an early low of $1.2166.

Against the Japanese currency, the dollar was trading at 107.28 yen, gaining nearly 0.25% from previous close of 107.03 yen a dollar.

The Australian dollar was flat at $0.6458. The Swiss franc was down at CHF 0.9735 a dollar, compared to CHF 0.9721 on Wednesday.

Against the Loonie, the dollar was stronger at C$1.4043, up nearly 0.6% from previous close of C$1.4101.

The material has been provided by InstaForex Company –