EUR/USD Current price: 1.1659
- Fed's Powell confident outlook was the perfect excuse for dollar bulls to come back.
- EU inflation expected to remain subdued in June, seen up 1.0% YoY.
After hitting a 4-day high of 1.7442, the EUR/USD pair trimmed its weekly gains and fell to fresh lows breaking through the 1.1660 support in the US afternoon. The dollar gathered momentum ahead of Wall Street's opening, later fueled by Fed head Powell's testimony on monetary policy before a Senate special committee, where he remarked the robust pace of economic growth, and that recent inflation readings are encouraging. Mr. Powell dodged discussing trade effects on monetary policy, offering little new on this last, although his optimistic tone was enough to boost the dollar, particularly after the latest slide seemed just corrective in the middle of its bullish run. Adding to dollar's gains, manufacturing output in the country increased by the most in four months last June, up at a 1.9% annualized rate. Industrial Production in the same month was up 0.6% as expected, despite Capacity Utilization rose by 78.0%, less than market's forecast of 78.3%.
The EU will release June inflation figures this Wednesday, with core yearly CPI expected to have remained unchanged at 1.0%. The US will offer June Housing Starts and Building Permits, with the first seen down 2.2% but the second increasing by 6.0%. Fed's Powell will repeat his testimony but this time before a different committee, usually having quite a limited effect on the market.
Technically, the pair is gaining downward traction, but still inside familiar levels. In the 4 hours chart, it fell below all of its moving averages, which are confined to a tight range and directionless around 1.1680/90, while technical indicators turned south almost vertically, having already crossed their mid-lines. Renewed selling interest around the current level should lead to a test of 1.1590, the low established on July 2nd, while below this last, 1.1550 is the next probable bearish target.
Support levels: 1.1620 1.1590 1.1550
Resistance levels: 1.1685 1.1720 1.1755
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