• The EUR/USD is trading around the round $1.2300 level, slightly in the middle of the day's trading range.
  • The Monetary Policy Report by the Fed and various public appearances from FOMC members did not change the picture for US Monetary Policy.

The EUR/USD is trading steadily around $1.2300 in narrowing trading ranges in the last session of the week. The calm comes as US stock markets are slightly higher and US bond yields slide to around 2.87% after hitting new 4-year highs earlier in the week.

The Federal Reserve published its Monetary Policy Report, a semi-annual document that precedes the testimony of the Fed Chair next week. Tension is mounting towards the first appearance of Chair Powell on Tuesday next week. However, the report today did not trigger any significant headlines. The Fed foresees the current path of gradual rate hikes to continue. Without an acceleration in the path of hikes, the greenback does not have further reasons to rise.

The Fed is content with the ongoing economic expansion, the steady gain in jobs, high consumer sentiment and the global growth environment. They did express some worries about high equity valuations in various areas and mentioned the use of leverage. Nevertheless, the document does not reveal a concern for breakout inflation.

FOMC members Rosengren and Dudley spoke earlier on, but they did not make any significant comments on monetary policy. Earlier in the day, euro-zone inflation numbers confirmed the early read of 1.3% YoY headline CPI and 1.0% core CPI in January.

The US Dollar has been tracking the benchmark 10-year yields and is likely to continue doing so. 

EUR/USD technical levels

The high of $1.2336 is the immediate level of resistance, coinciding with the January support line around those levels. Further above, $1.2450 capped the pair earlier in the month. It is followed by $1.2555, the 3-year high seen last week. 

Looking down, the low of $1.2205 serves as a line of support below the daily trough of $1.2279. Further below, the low of $1.2160 seen in early January is the next level to watch, and it is followed by the 2017 high of $.12090.

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