The EUR/USD pair dropped significantly during the last 24 hours after new Fed’s head Jerome Powell testimony bolstered the US dollar that has been trading in a choppy manner lately due to some concerns about the last readings. Support is set at 1.22, resistance at 1.23.
Yesterday passed in the light of new Fed’s Chief, Jerome Powell. Although many Fed members have commented the case of forthcoming rate hikes, the markets were mostly concerned what Powell thinks about the future of Fed’s monetary policy.
The new head of Federal Reserve informed that the current monetary policy will be continued. Powell tried to play down the concerns about the market volatility we’ve lately seen and said that it won’t affect his economic outlook and maintaining expectation for further gradual rate hikes. He also said that stronger data convince the Fed that the inflation will finally reach the target level which seemed impossible for quite a time now.
After Powell’s testimony, the markets are nearly sure that the first rate hike will happen as soon as in March. Although it seemed that Fed’s head is trying to influence the markets as little as possible, more speculations arise that the Federal Reserve may hike rates even four times this year if further data coming from the US would support such a decision.
Pic.1. EUR/USD chart.
The dollar has finally strengthened after Jerome Powell’s testimony that calmed down the fears of a potential shift in Fed’s monetary policy. We’re expecting the day to be highly volatile as we’re expecting for the release of personal consumption numbers and GDP reading in the US. Strong reading may bring further support for the greenback.