Federal Reserve Chairman Bernanke’s speech today helped boost the U.S. Dollar after mentioning that new financial regulatory reforms will benefit smaller banks. Basically the changes will make it harder for larger banks to have an edge over the smaller banks by restricting their activities and increasing their capital requirements and allowing regulators to have more control. The main benefit of these reforms is fairness and the establishment of a more level playing field for financial institutions no matter what size they are.
Bernanke stressed though that implementation of the new measures of the Basel III rules for international capital markets will take place over a long transition period in order to prevent any negative effects on the U.S. economy. This is important as the economy is still fragile from the global financial crisis. After release of the speech the EURUSD pair plummeted over 26 pips. At 16:00 GMT when the speech was scheduled, the EURUSD opened at 1.4122 and traded at a low of 1.4083 at the close of the U.S. session.