EUR/USD Forecast: Dovish Powell not enough to push it higher
EUR/USD Current Price: 1.1818
- Federal Reserve chief Jerome Powell to testify before Congress.
- European Industrial Production missed the market’s expectations in May.
- EUR/USD bounced from a fresh three-month low, but the upside seems limited.
The EUR/USD pair recovered nicely from an intraday low of 1.1771, also a fresh three-month low, and trades above the 1.1800 level. The American dollar maintained the positive tone through the first half of the day, giving up as Federal Reserve chief Powell’s testimony looms. The head of the US central bank will testify on the Semi-Annual Monetary Policy Report before the House Financial Services Committee.
Powell prepared remarks have already been published, and his words are dovish. He said that the central bank will deliver powerful support until the economic recovery is complete. He added that inflation is expected to remain elevated in the upcoming months before easing.
Beyond Powell, the macroeconomic calendar is scarce. Earlier today, the EU published May Industrial Production, which contracted 1% MoM and rose 20.5% YoY, missing the market’s expectations. The US has just published the June Producer Price Index, which rose 7.3% YoY, beating the market’s expectations.
EUR/USD short-term technical outlook
The EUR/USD pair trades in the 1.1820 price zone ahead of Wall Street’s opening, with its bullish potential limited in the near-term. The 4-hour chart shows that the pair remains below all of its moving averages, although the 20 and 100 SMAs are pretty much flat. Technical indicators have bounced but remain within negative levels. The recovery could extend, but hardly beyond a critical Fibonacci resistance level at 1.1920.
Support levels: 1.1770 1.1720 1.1685
Resistance levels: 1.1840 1.1885 1.1920
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Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
