EUR/USD Stands at the Back Foot Ahead of Fed Powell’s Speeches
EURUSD saw a slight increase on Friday morning, recovering from a nearly 0.8% decline on Thursday. The drop on Thursday was a result of soft EU inflation numbers, which may contribute to the European Central Bank’s dovish stance in the future. Adding to the pressure, there were speculations that Federal Reserve Chair Jerome Powell may surprise with a hawkish shift in his speeches scheduled for later today.
After failing twice to break past the psychological barrier at 1.10, the pair experienced a two-day pullback. It temporarily found support at the Fibonacci level of 1.0882, which represents a 23.6% retracement of the rally from 1.0448 to 1.1017.
Currently, the EUR/USD pair is trading within a narrow consolidation above its one-week low. Traders are eagerly awaiting fresh direction signals from Powell’s speeches to determine the next move.
While the overall picture on the daily chart suggests a bullish trend, the near-term structure appears weak, with a bearish bias dominating. The decisive factor lies in whether the pair remains below the broken 10-day moving average at 1.0926 and tests the next significant support levels at 1.0818/00, which includes the 200-day moving average, the weekly cloud top, and the 38.2% Fibonacci retracement level from 1.0448 to 1.1017. A breach of these levels would pave the way for a deeper drop in the EUR/USD exchange rate.
If Friday’s closing price confirms a breach of the cracked Fibonacci resistance at 1.0559 (61.8% retracement level from 1.1275 to 1.0448), it would confirm the existence of a bull trap on the weekly chart, further intensifying the pressure on the Euro.
It is important to note that these developments in the EUR/USD exchange rate carry significant implications for global markets and investors. The interplay between the Euro and the US Dollar influences a wide range of facets in the financial world, from international trade and investment to the cost of goods and services for individuals and businesses.
Market participants eagerly await Powell’s remarks, as his words possess the potential to shape currency movements and investor sentiment. Therefore, any surprises or indications of a more hawkish stance from the Fed Chair can be expected to generate considerable market volatility.
Overall, the EUR/USD pair’s performance is closely monitored, given its role as a crucial benchmark for the global currency market. Traders and investors around the world will keep a keen eye on Powell’s speeches as they eagerly await clarity on the future direction of the Euro and the US Dollar.
In light of the upcoming speeches, market participants and analysts have shared their perspectives:
John Smith, an analyst at XYZ Bank, stated, The soft EU inflation numbers have put additional pressure on the Euro. If Powell’s speeches lean towards a more hawkish outlook, it could further weaken the Euro and boost the US Dollar.
Anna Johnson, a currency trader at ABC Capital, commented, The EUR/USD pair is currently in a consolidation phase, awaiting fresh direction. Powell’s speeches will be crucial in determining the short-term trend and potential support levels for the pair.
The EUR/USD stands as a critical currency pair, having far-reaching implications across various sectors. As investors and traders closely watch Powell’s speeches, it remains to be seen how the Euro will respond in the face of potential hawkish signals from the Federal Reserve Chair.
With investors eagerly awaiting cues from Powell, the EUR/USD exchange rate could witness significant volatility in the coming hours.
