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Hardy: Fate of USD depends on whether Fed has lost its mojo

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Even if the Federal Reserve's Janet Yellen delivers a dovish testimony to Congress later this Wednesday will it really help the market? That's the question Saxo's John Hardy is asking. 

The market has already written off the Fed's proposed rate hikes for this year, says Hardy. Although he's unsure whether Yellen will hint at a return to financial easing, he says it will be interesting to see if there's a focus on negative interest rates or Quantitative Easing (QE).

Meanwhile key levels in EURUSD and USDJPY have already been broken, says John. If the Fed capitulates combined with risk off, we could see EURUSD continue higher and USDJAP lower, he explains. But he concludes that if we see the opposite, we could see reversals in USD strength.