The implied odds of a Fed rate hike at the July 26 Fed meeting are at 76%, which is about the same as before Powell spoke today. In a sense, he endorsed the market pricing, saying that decisions will be made meeting by meeting. At the same time, he highlighted that nearly all FOMC participants expect to hike 'somewhat further' by year end.
The dollar softened during his testimony and is near session lows. That's pushed the euro up 55 pips to 1.0970 on the day.
It's important to note that Powell isn't the only thing happening today. The Fed's Goolsbee said the latest Fed decision was a 'close call' for him, suggesting he will be pushing back against further hikes.
The UK inflation report was also a shocker with core CPI at 7.1% compared to 6.8% expected. That underscores the growing probability that the Bank of England's terminal rate will exceed the Fed's.
Finally, we could be seeing quarter-end flows in action. Treasury yields are slipping today and tech stocks are selling off. Both of those moves suggest some measure of rebalancing based on the strong Q2 moves.