The US Dollar Index (DXY) benefited from chaos in the broader financial markets on Tuesday, resulting in a tech selloff, a bitcoin collapse, and soaring Treasurys. But the greenback’s modest gain could be brief after the Federal Reserve eased market fears over inflation and monetary support. Will everything return to normal in the middle of the trading week?

Fed Chair Jerome Powell delivered his semi-annual Monetary Policy Report to Congress on Tuesday, discussing the state of the US economy. The central bank essentially stated that the country is a long way from achieving the Eccles Building’s employment and inflation goals, adding that it could take longer than its expectations to achieve full employment and inflation measures.

Powell stated that new coronavirus cases are coming down, hospitalizations are declining, and vaccinations are rising. Despite these positive developments, the economic recovery, according to the Fed, is uneven and far from being complete. The path forward is unclear at this point.

But the bleak picture of the world’s largest economy failed to send markets cratering like last year. Instead, the Fed reassured the equities arena that the institution is still committed to utilizing a wide range of tools to cushion the blows from the economic fallout of the COVID-19 public health crisis. These remarks echo previous statements he has made during post-Federal Open Market Committee (FOMC) press conferences.

What about inflation? In recent weeks, as the commodities supercycle kicks into high gear, there have been concerns that inflation is about to spike. However, Powell stated that the inflation rate is only poised to surpass 2% temporarily but that it will remain below that level a lot longer.

Housing data was in focus on Tuesday, with housing prices climbing about 1% in December. Also, the Federal Reserve Bank of Richmond’s manufacturing index was unchanged at 14 in February.

The US bond market was mixed, with the benchmark 10-year bond dipping 0.005% to 1.364%. The one-year bill edged up 0.007% to 0.63%, while the 30-year bond advanced 0.021% to 2.201%.

The DXY, which gauges the dollar against a basket of currencies, rose 0.15% to 90.15, from an opening of 90.02. The index has erased most of its gains in 2021 as it is up only 0.25% year-to-date. It had rallied as much as 1.5%.

The USD/CAD currency pair tumbled 0.25% to 1.2586, from an opening of 1.2616, at 19:26 GMT on Tuesday. The EUR/USD dropped 0.11% to 1.2146, from an opening of 1.2160.