EUR/USD has tumbled below 1.18 after high US inflation figures and a soft bond auction. Next stop, 1.17? Fed Chair Powell's testimony is critical to the next moves, Yohay Elam, an Analyst at FXStreet, briefs.
Powerful Powell holds the keys to next moves
“The Fed Chair could still knock the greenback down by insisting that price rises are transitory. On the other hand, Powell could return to his relatively hawkish stance in June, when he opened the door to the chance that inflation is here to stay if he sees the data differently.”
“The Fed Chair's focus is on employment and inflation, but he will likely speak about the broader economy impacted by the reopening – and risks to that revival. The Delta covid variant is spreading in some parts of the US, with infections double the low levels they hit two weeks ago. If he flags that as a risk that could delay tapering, the greenback could fall.”
“After the dust settles in the US, the focus could shift back to Europe's Delta wave – hurting the Netherlands, Spain and Portugal more than others– but spreading also in Germany and France. Eventually, it could weigh on the euro while the dollar could benefit from safe-haven flows. However, that is for another day, after the Powell effect fades.”
“Support awaits at the new multi-month low of 1.1772, followed by 1.1740 and then 1.17 – levels last seen early in the spring.”
“Some resistance is at 1.1810, which was a low point in June. It is followed by 1.1825, which was a swing low early in July, and then by 1.1885.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD trades with mild positive bias near 0.6700, RBA Meeting Minutes eyed
The AUD/USD trades with a mild positive bias near 0.6695 during the early Asian session on Monday. The weaker US Dollar provides some support to the pair. The Fed’s Bostic, Barr, Waller, Jefferson, and Mester are set to speak on Monday.
EUR/USD: Could FOMC Minutes provide fresh clues?
The EUR/USD pair advanced for a fourth consecutive week, comfortably trading around 1.0860 ahead of the close. Progress had been shallow, as the pair is up roughly 250 pips from the year low of 1.0600 posted mid-April.
Gold looks to extend uptrend once it confirms $2,400 as support
Gold price continued to push higher last week and rose above $2,400 on Friday, gaining nearly 2% for the week. Investors will continue to scrutinize comments from Fed officials this week and look for fresh hints on the timing of the policy pivot in the minutes of the April 30-May 1 meeting.
AI tokens could really ahead of Nvidia earnings
Native cryptocurrencies of several blockchain projects using Artificial Intelligence could register gains in the coming week as the market prepares for NVIDIA earnings report.
Week ahead: Flash PMIs, UK and Japan CPIs in focus. RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.