EUR/USD pulls back from overnight highs on caution ahead of Powell’s speech
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- EUR/USD drifts slightly lower in Asia, now trades in the red near 1.1820.
- Caution ahead of Powell's speech Thurs dampens trading activity, as per Reuters.
- Fed's chief is likely to signal tolerance for high inflation.
The buying interest around the single currency is weakening on Wednesday and dragging EUR/USD lower. The pair is currently trading at 1.818, representing a 0.125 decline on the day, having clocked a high of 1.1844 on Tuesday.
Caution ahead of Powell’s speech
Federal Reserve’s chairman Powell is expected to open the Kansas City Fed's annual economic policy conference on Thursday with an update on how the central bank plans to adjust its monetary policy to boost inflation amid a coronavirus pandemic that has pushed the US economy into recession.
Powell is widely expected to signal willingness to allow inflation to run higher than normal for a period of time. Such a change in strategy will likely bolster inflation expectations and weigh over the greenback. However, with the dovish expectations built in, the scope for disappointment is high. This uncertainty seems to have injected caution into the market place ahead of the event.
The pair could continue to trade within Monday’s trading range of 1.1784 to 1.1850 during the day ahead. The European data calendar is empty, however, the US is set to report data for Durable Goods Orders at 12:30 GMT. The pair, therefore, may witness some volatility during the American trading hours. Speech by European Central Bank’s Schnabel at 11:30 GMT is unlikely to yield big moves in the single currency.
Technical levels
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