EUR/USD Stays in the Cloud Ahead of Powell Testimony

  • EURUSD
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EUR/USD Analysis

The pair rose last week, helped by persistent aggressive commentary from ECB officials, such the ones from the central bankers of Estonia and Slovenia. Speaking on the same event on Friday, Mr Muller [1] and Mr Vasle [2] both hinted to more rate increases past the intended 50 basis points hike in March.

Meanwhile the greenback saw outflows on Friday following the US services sector data, while the Fed's policy seemed to be in the background. It returns front and center this week though, as Chair Powell testifies in Congress on Tuesday and Wednesday. He has maintained his hawkish stance, but had spoken a lot about the "disinflation" process after the last policy decision, a word that was nowhere to be found in the accounts of that meeting. [3]

His commentary could set the tone for the next meeting and determine the pair's next leg, but Mr Powell may be cagey, as his appearance takes place only a couple of days ahead of the US jobs report. EUR/USD makes a cautious start to the current week in anticipation of these events, but tries to sustain its positive undertone, stuck within the daily Ichimoku Cloud.

This gives it the chance to push for the upper border (at around 1.0780), but a catalyst would be needed for breaking above it and towards 1.0930-42. As long as it stays capped by the EMA200 though, the lower border of the daily Ichimokou Cloud is more vulnerable (1.0580). However, the broader 1.0451-1.0380 region can provide support and it is hard to justify sustained weakness below it, given the current policy expectation by the ECB and the Fed.

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Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 06 Mar 2023 https://www.eestipank.ee/en/press/madis-muller-why-inflation-so-high-and-so-different-different-euro-area-countries-03032023

2

Retrieved 06 Mar 2023 https://www.bsi.si/en/speeches-and-interviews/2004/uvodni-nagovor-guvernerja-bostjana-vasleta-na-predavanju-zakaj-je-inflacija-visoka-in-tako-razlicna-med-drzavami-evrskega-obmocja

3

Retrieved 16 Jun 2024 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20230201.htm

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