EUR/USD Heads for 1.10 Again, As Powell Starts Testimony

Powell's initial remarks seem less hawkish than markets were anticipating which has sent the USD lower across the board

Skerdian Meta•Wednesday, June 21, 2023•2 min read

EUR/USD was trading within a narrow range of 28 pips during most of the day today with the market’s focus on the upcoming testimony of FED Chairman Jerome Powell at the US congress. Although there were no major surprises in his pre-released text, trades are starting to activate on his tone regarding the recent decision by the Federal Open Market Committee (FOMC) to skip a hike in that meeting and the implication of potential tightening measures before the end of the year.

From a technical standpoint, the EUR/USD has support levels around the 1.09 area on the downside, meaning these are price levels where buying interest may emerge. On the topside, there is close resistance between 1.0933 and 1.0942, which represents levels where selling pressure may increase. But the resistance zone was broken without much hassle and now this pair is trading above 1.0950, looking as if it’s heading for 1.10. Traders will be observing for a decisive break above or below either extreme of this narrow range, which could lead to continued momentum in the direction of the break.

FED Q&A Testifying at the US Congress:

Level for rates and speed of hikes are separate
It may make sense to move rates higher, at more moderate pace
Fed is now moderating the pace of rate hike’s
Banking regulation should be transparent, consistent not too volatile
Capital is central to banking regulation
Our US banks are strongly capitalized

The dollar is starting to move lower. The testimony has been rather subdued so far. The FED chair did imply a slowing of the pace of hikes which is consistent with the skip seen at the last meeting. The EUR/USD has extended to new session highs. The trading range has increased to 51 pips versus 28 pips. The average of the last month has been around 68 pips. The GBP/USD is also moving higher and away from its 200-hour moving average 1.26852. The USD/CHF that is just broken below its 100-hour moving average of 0.89534.

EUR/USD Live Chart

EUR/USD

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.