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The EUR/USD pair will react to the upcoming testimony by Jerome Powell in Congress.
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- Set a buy-stop at 1.0962 and a take-profit at 1.1050.
- Add a stop-loss at 1.0800.
- Timeline: 1-2 days.
- Set a sell-stop at 1.0875 and a take-profit at 1.0800.
- Add a stop-loss at 1.0950.
The EUR/USD rate was in a consolidation phase on Wednesday morning ahead of the upcoming testimony by Jerome Powell, the Federal Reserve Chair. The pair was hovering at 1.0910, a few points below last Friday’s high of 1.0962.
The EUR/USD retreated slightly while the US dollar index drifted upwards after the strong American housing data. Numbers released on Tuesday revealed that the country’s housing starts jumped by more than 21% to 1.613 million in May. That was much higher than the median estimate of a 0.8% decline.
Further data showed that the country’s building permits rose by 5.2% to 1.49 million in May. This increase was better than the median estimate of 1.42 million and the previous month’s 1.14 million.
These numbers mean that the American economy is doing well even as interest rates sit at the highest level in more than a decade. Other US numbers have been relatively strong. For example, jobs data published earlier this month showed that the economy created over 339k jobs in May. Inflation also dropped to 4%.
Therefore, these numbers mean that the Federal Reserve will likely restart hiking interest rates in its July meeting. The bank decided to leave interest rates unchanged for the first time in ten meetings.
The EUR/USD pair will react to the upcoming testimony by Jerome Powell in Congress. He will likely address the current state of the economy and the action that the Fed did last week. He will also talk about what the bank will do in the next few meetings.
The other important news will be a statement by Loretta Mester and Austan Goolsbee, the head of Chicago’s Federal Reserve. Other Fed officials who will speak are Nathan Jefferson and Lisa Cook.
The EUR/USD pair retreated slightly after it hit the important resistance point at 1.0962 on Friday. It has moved slightly below the 23.6% Fibonacci Retracement level on the 4H chart. At the same time, the Relative Strength Index (RSI) has pulled back from the overbought level of 75 to about 55.
Additionally, the pair remains above the 50-period moving average while the Average Directional Index has tilted lower. Therefore, the pair will likely resume the bullish trend and retest the next key psychological level at 1.100.
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