empty
08.02.2023 05:52 AM
EUR/USD. What did Powell say?

The EUR/USD pair suddenly fell, having tested the 6th figure. Although traders failed to hold steady in this price area, market participants are showing growing interest in the U.S. currency. The greenback was not only supported by Friday's strong Nonfarm Payrolls report, but also by Federal Reserve Chairman Jerome Powell, who sounded some rather hawkish signals on Tuesday. The Fed chief spoke at the Economic Club in Washington, D.C., where he commented on the latest economic data and also spoke on inflation.

Powell's ambivalent message

The pair initially surged by nearly 100 points amid the general weakening of the U.S. dollar. It reacted this way because Powell mentioned that the disinflationary process has begun in America. He did however clarify that the process, in particular, is observed in goods but hasn't kicked in the service sector yet.

This image is no longer relevant

The market interpreted these words against the greenback, as Powell's rhetoric was "final" in the context of a possible hawkish rate hike. Such assumptions were reinforced after the Fed chief reacted rather calmly to January's Nonfarm payrolls, making it clear that Friday's jobs report would not change the central bank's approach to future interest rate hikes.

In the backdrop of such conclusions, the EUR/USD jumped from 1.0690 to the target of 1.0770 within an hour. But Powell's follow-up rhetoric allowed the bears to test the 6th figure again.

Long, long way to go

After acknowledging the fact that the U.S. began the disinflationary process, Powell noted that it may take a long time for the consumer price growth rate to slow down. As part of his speech, he highlighted that getting inflation down to 2% will take a "significant period of time." In this context, he used phrases that were different in form (but identical in meaning) - that the Fed would take "a considerable period of time" and that it was "still early in the process" in general.

But in the end, Powell was very specific about the timing, which is uncharacteristic of him, stating that inflation in the U.S. won't slow down until 2024. He said the following verbatim: "My guess is it will take certainly into not just this year, but next year to get down close to 2%."

This image is no longer relevant

Powell expanded on this point by making two other important points. First, he said that interest rates will continue to rise. Since rates have not yet reached an acceptable level for fighting inflation (without specifying what level of the rate is "acceptable"). Secondly, he reassured the markets that the Fed would have to hold policy at a restrictive level for "some time". Again, Powell also did not specify how long the Fed intends to keep the rate at the peak level.

However, despite the wording (except for the reference to 2024), Powell made it clear that the U.S. central bank is not going to curtail its hawkish strategy in the foreseeable future. In practice, that means the Fed will increase the rate by 25 points not only in March, but probably at the next two meetings as well. Investors now place a 71% probability of a 25-point rate hike at the Fed's May meeting, according to the CME's FedWatch tool. The likelihood of another round of hikes at the June meeting is estimated at 35% (which is not insignificant given the slowdown in U.S. inflation).

Conclusions

Despite the fact that bears failed to settle in the area of the 6th figure, bearish sentiment still dominates the pair. As a matter of fact, Powell ruled out the end of the current tightening cycle (thereby, denying the rumors) and announced further steps in the direction of the range of 5.25-5.50%.

At the same time, the European Central Bank did not ally itself with the euro at the end of its February meeting. ECB President Christine Lagarde, while announcing the realization of the 50-point scenario in March, simultaneously cast doubt on further rate hikes. According to her, after the March decision "we will then evaluate the subsequent path of our monetary policy,". Euro-area headline inflation has decelerated for the third straight month, and at a fairly brisk pace (it came in at 8.5% in January against a forecast of 9.0%). If the core CPI in February-March repeats the trajectory of the headline inflation, a "post-March" rate hike will be highly questionable.

From a technical point of view, the pair is between the middle and bottom lines of the Bollinger Bands indicator, as well as under the Tenkan-sen lines. According to Tuesday's results, the bears were unable to push through the support level of 1.0700 (bottom line of the Bollinger Bands on the D1). If the bears overcome this barrier, the next target will be 1.0600, which corresponds to the upper limit of the Kumo cloud on the same chart.

Irina Manzenko,
Especialista em análise na InstaForex
© 2007-2025
Selecionar intervalo de tempo
5
min
15
min
30
min
1
hora
4
horas
1
dia
1
s.
Ganhe com as variações das taxas das criptomoedas com a InstaForex.
Baixe o MetaTrader 4 e abra a sua primeira operação.
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    PARTICIPE DO CONCURSO

Recommended Stories

USD/JPY. Análise e previsão

O par USD/JPY permanece acima do importante nível de 144,00, em meio à fraqueza contínua do dólar americano. Dados sólidos de gastos das famílias divulgados hoje no Japão reforçaram expectativas

Irina Yanina 18:25 2025-07-04 UTC+2

NZD/USD. Análise e previsão

O par NZD/USD está se recuperando após saltar do nível 0,6030, que marca uma mínima semanal, e está tentando ganhar mais impulso positivo. Isso sugere uma quebra na sequência

Irina Yanina 18:21 2025-07-04 UTC+2

USD/CAD. Análise e previsão

Na sexta-feira, o USD/CAD permanece próximo de uma baixa de três semanas, sendo negociado abaixo do nível-chave de 1,3600. O dólar norte-americano está com dificuldades para estender seus ganhos após

Irina Yanina 18:18 2025-07-04 UTC+2

Relatório positivo sobre o emprego nos EUA supera todas as expectativas

O dólar americano subiu em relação a uma série de ativos de risco, uma vez que os números-chave do relatório de emprego de junho convenceram a Reserva Federal

Jakub Novak 16:43 2025-07-04 UTC+2

O mercado comemora uma vitória

Os mercados financeiros reagiram de forma positiva aos dados de emprego divulgados ontem nos Estados Unidos, referentes ao mês de junho. As folhas de pagamento cresceram em 143 mil vagas

Marek Petkovich 16:37 2025-07-04 UTC+2

A próxima semana pode começar com uma nota positiva para os mercados (possível retomada do crescimento no #SPX e no #NDX)

Os dados divulgados ontem pelo Departamento do Trabalho dos Estados Unidos trouxeram um tom de otimismo — ainda que cauteloso — para os investidores. As bolsas americanas estenderam seus ganhos

Pati Gani 16:29 2025-07-04 UTC+2

O mercado se prepara para outro impacto

Ainda ontem, o presidente dos EUA, Donald Trump, anunciou que o seu governo começaria a enviar cartas aos parceiros comerciais na sexta-feira, delineando as taxas tarifárias unilaterais que, segundo

Jakub Novak 14:45 2025-07-04 UTC+2

USD/JPY. Análise e previsão

O par USD/JPY continua sob pressão, apesar do dólar americano ter registrado ganhos moderados pelo segundo dia consecutivo, aproximando-se do nível 144,00. A melhora no sentimento global em relação

Irina Yanina 22:17 2025-07-03 UTC+2

Boas notícias apoiarão os mercados de ações e a demanda por tokens (potencial de alta para Bitcoin e #NDX)

O mercado ignorou os dados extremamente fracos sobre o emprego divulgados pela ADP, concentrando-se em outros fatores. O relatório da ADP, publicado na quarta-feira, revelou uma desaceleração significativa no setor

Pati Gani 17:00 2025-07-03 UTC+2

Trump ataca a China usando o Vietnã como peça estratégica

Ontem, foi divulgado que o presidente Donald Trump fechou um acordo comercial com o Vietnã. Isso ocorreu após várias semanas de intensas negociações diplomáticas entre os dois países e poucos

Jakub Novak 16:07 2025-07-03 UTC+2
Não pode falar agora?
Faça sua pergunta no chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.