The Federal Reserve was persistently hawkish through the first half of February, but this did little to bring back the prior strength that had driven the Greenback-higher in a historic move after the U.S. Elections.

Two weeks ago, at the Fed’s twice-annual Humphrey-Hawkins testimony, Fed Chair Janet Yellen opened her remarks by saying that she felt the bank should hike rates ‘sooner rather than later,’ and this drove the Greenback up to a key resistance level at 101.53. This is the 50% marker of the January move-lower, and if the U.S. Dollar was able to pose a sustained-break above this level, the prospect of top-side continuation would appear considerably more attractive. But that was not to be, at least two weeks ago, as the second day of that testimony elicited a reversal that brought back bearish price action to the Dollar.

Then last week, the release of the Fed meeting minutes from the prior rate decision at the end of January/early February were released and, once again, inspired a quick bout of USD-strength. But, just as we saw in the week prior, sellers came-in at this key resistance level of 101.53, and the U.S. Dollar failed to move-back into that bullish-trend state that had dominated FX markets to close 2016.

But this Wednesday was far different…

The headlines are likely associating much of this recent move in the Dollar with President Trump, as has become fairly standard media protocol. But if we look beneath the surface, there are some contributing factors that are getting traders to hastily-increase probabilities for a rate hike in March, and that’s been a consistent chorus of hawkish Fed-Speak. Just hours before President Trump delivered his Joint Address to the Union, San Francisco Fed President John Williams gave some very hawkish comments to markets; and for a centrist as Mr. Williams is often considered to be – this showed that the Fed might be closer to that next rate hike than many were previously expecting. This likely carried considerable weight and, as we looked at yesterday, the Dollar’s bullish move actually began well-ahead of the Joint Address to the Union, right as Mr. William’s comments were filtering into markets.