EUR/USD to extend its gains folowing Powell-powered recovery

"Still a ways off" – these words by Federal Reserve Chair Jerome Powell have resulted in a lift-off for EUR/USD, or more precisely, a slide of the dollar. According to FXStreet’s Analyst Yohay Elam, Powell-powered recovery is set to continue. 

See: EUR/USD to find solid support at the 1.1705/1.1695 zone – DBS Bank

Powell's second testimony and US data could result in another positive day

“EUR/USD has recovered after Fed Chair Powell pushed back against any imminent tightening. More dollars printed means a weaker currency. Moreover, Powell dismissed surprisingly strong inflation figures as transitory. He did expect inflation to remain elevated for a few more months, but to drop later on.” 

“Will the dollar greenback extend its grind? Powell is slated to appear before a Senate committee later in the day, and he could keep the pressure going. Investors will also eye weekly jobless claims and two manufacturing surveys released by the Fed – one for the New York region and the other for Philadelphia.”

“The focus on Capitol Hill remains of importance as discussions about a $3.5 trillion infrastructure bill agreed by a wide group of Democrats is high on the agenda. If progress is made, the dollar could gain on prospects of higher inflation and thus rate hikes coming sooner rather than later. However, if politicians bicker, the greenback could decline. Less government spending means depressed bond issuance – and a potential drop in Treasury yields could weigh on the dollar.”

“Some resistance is at 1.1860, where the 100 SMA hits the price. It is followed by 1.1880, a stubborn cap, and by 1.19 and 1.1950.”

“Support awaits at 1.1825, which cushioned EUR/USD in recent days, then by 1.1775, the multi-month low. The next level to watch is 1.1740.”