EUR / USD retreats from highs of 1.1655, steady around 1.1625 after Fed Powell comments

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  • The EUR / USD divested of Fed Chairman Powell’s earlier daily gains amid the weak US dollar.
  • EUR / USD held on to its daily wins amid lower US Treasury yields.
  • The EUR / USD 1 hour chart shows the Euro below the 100 SMA, opening the door to a test of 1.1600.

EUR / USD rises during the American session, gaining 0.03% trading at 1.1627 at the time of writing. During the last hours, the single currency registered a new daily maximum at 1.1655, but fell back towards 1.1621, due to the statements of the president of the Federal Reserve, Jerome Powell.

Powell’s comments affected market sentiment

Before Fed Chairman Powell’s speech, market sentiment was bullish. As he progressed in his speech and during the question-and-answer session, the mood of investors shifted towards a reduction in risk, as portrayed by the decline in US equity markets. Meanwhile, the US dollar index, which tracks the dollar’s performance against six rivals, is down 0.11%, currently at 93.66, while the 10-year US Treasury yield reversed the bullish move. to settle at 1,643%, three basis points lower than at the opening.

Jerome Powell said that the Fed is on track to begin the downsizing, and if the economy evolves as they (the Fed) expected, it will be completed in the first half of 2022. He reiterated that although it favors the timing of QE downsizing, he added , “I don’t think this is the time to raise rates.”

The euro zone and the US PMI barely moved the EUR / USD pair

On the macroeconomic front, the eurozone economic agenda presented the October PMI Markit IHS for France and Germany were mixed, but the main focus of investors was the German figures. The German manufacturing PMI rose to 58.2 from a forecast 56.5, contrary to the services PMI, which rose to 52.4 below the 55 estimate. The Markit PMI Composite, which considers both readings, came in at 52, down from the 54 expected.

On the other hand, the US economic calendar revealed the IHS Markit PMI for manufacturing and services for October, which offers mixed figures. The market manufacturing PMI rose to 59.2, worse than the estimated 60.3. As for the Markit Services PMI, it rose to 58.2 above the expected 55.1.

EUR / USD Forecast: Technical Outlook

The EUR / USD 1 hour chart shows that the shared currency remains under intense selling pressure. The day’s high around 1.1655 was severely rejected towards 1.1625, breaking an upward sloping rising trend line. At press time, the pair is trading below the aforementioned 50 and 100 hourly simple moving averages (H-SMA), confirming selling pressure.

However, the pair found support at Thursday’s low around 1.1619, but a break below would open the door for a test of the 1.1600 figure.

Technical levels


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