Forex Today: Turkish lira action rattles markets, focus shifts to Fed's Powell

Here is what you need to know on Monday, March 22:

The US dollar is off the highs as yields retreat ahead of a testimony by the Fed's Powell. The sacking of Turkey's central bank governor triggered a sell-off in the lira and rattled other EM currencies. The EU is moving closer to blocking vaccine exports to the UK amid growing cases.

Yields: Returns on US ten-year Treasuries are hovering around 1.70%, allowing the dollar to retreat from the highs and stocks to stabilize. President Joe Biden is reportedly considering a new economic plan that includes infrastructure spending and also tax hikes, with the latter worrying investors. 

Jerome Powell, Chair of the Federal Reserve, will testify in Congress alongside his Treasury Secretary Janet Yellen about the response to the pandemic. Both may shed light on current conditions and additional support to the economy. Around a quarter of all Americans have already received one COVID-19 vaccine dose.

Lira: Turkey's President Recep Tayyip Erdoğan has sacked the central bank governor – the third change in 21 months – after a significant rate hike. Markets reacted with a massive sell-off 15% sell-off in the lira. The currency is recovering as the new governor and the finance minister promise stable monetary policy. 

Other emerging market currencies have also suffered volatility amid the turmoil in the Turkish lira and as coronavirus cases are rising. Brazil and India have been seeing an increase in infections. 

The EU is considering blocking exports of AstraZeneca's vaccines to the UK as Europeans are growingly frustrated with the ongoing crisis and rising infection figures. The European regulator confirmed that these jabs are safe and effective last week.

German Chancellor Angela Merkel is considering a four-week extension of the nationwide lockdown and around 20 million French citizens are under new restrictions. EUR/USD is struggling to hold onto 1.19. 

GBP/USD is changing hands around 1.39 as Britain inoculated around 50% of adults with one dose. Administering the second dose on time is in doubt amid supply issues from the EU and also from India. 

Bitcoin is trading above $58,000, recovering from lower levels after another relatively active weekend. Ethereum is above $1,800 while XRP trades below $0.45. 

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