Superior broker technology provider since 2010
+1 (315) 675 1086 |

Jerome Powell Gives Bears a Boost


  • Sell the EUR/USD pair and set a take-profit at 1.0450.
  • Set a stop-loss at 1.0650.
  • Timeline: 1-2 days.
  • Set a buy-stop at 1.0630 and a take-profit at 1.0725.
  • Add a stop-loss at 1.0500.

The EUR/USD exchange rate dropped sharply after the hawkish tone by Jerome Powell. It suffered a harsh reversal as the US dollar index moved back to $105.42. The pair dropped to a low of 1.0570, the lowest point since March 1. It has dropped by 1.20% from its highest point this week.

The EUR/USD pair crashed after the 2-year bond yield jumped to the highest level since 2007. At the same time, the 10-year bond yield rose above 4% for the first time since last week while the US dollar index jumped. American stocks declined sharply, with the Dow Jones crashing by more than 400 points.

This price action happened as investors adjusted their expectations of what the Federal Reserve will do. In his testimony in the Senate, Jerome Powell warned that the Fed will likely deliver more tightening in the next few months. He cited the need for the bank to bring inflation to about 2%. He said:

“Although inflation has been moderating in recent months, the process of getting inflation back down to 2% has a long way to go and is likely to be bumpy.”

Therefore, forex traders believe that the Federal Reserve will hike interest rates by 0.50% in its meeting this month. Before his statement, the market was expecting the Fed to hike by 0.25% in the next three meetings.


Other hawkish Fed officials have maintained their tough talk on inflation. For example, James Bullard and Loretta Mester have advocated for more aggressive rates.

The implication of all this is that funds could continue moving to the US in a bid to attract superior returns. Besides, savings in dollars are yielding more than 5%. The EUR/USD pair will react to the second day of Jerome Powell’s testimony and the latest ADP jobs numbers.

The EUR/USD pair started retreating on February 2 when it peaked at 1.1034. This retreat saw it fall to the key support level at 1.0534 on February 27. It now seems like its attempt to rebound has found a strong resistance at 1.0693, where it has formed a double-top pattern. The downward trend is still being supported by the 25-day and 50-day moving averages.

The Stochastic Oscillator and the Relative Strength Index (RSI) have pointed downwards. Therefore, the pair will likely continue pulling back ahead of Powell’s second day of testimony. The target will be at 1.0500.


Ready to trade our free daily Forex trading signals? We’ve shortlisted the best Forex brokers in the industry for you.


Leave a Reply

Your email address will not be published. Required fields are marked *

YourOwnBrokerage is a leading Technology & Business Consulting firm with a specialized focus in Fintech industry.

RISK WARNING: Trading products are highly speculative in nature and carries a significant level of risk which may not be suitable for all investors. Please ensure you fully understand the risks involved and only invest money you can afford to lose. Seek advice from an independent adviser if at all unsure as to the suitability of investing in such instruments.

The content of this website must not be construed as personal advice. We recommend that you seek advice from an independent financial advisor.

The information on this website is not directed to residents of certain jurisdictions where such distribution or use would be contrary to local law or regulation.

© 2009 - 2024 All Rights Reserved.