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EUR/USD sets four-week high, eyes Powell’s testimony

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EUR/USD superior to four-week highs in Asia however is struggling to maintain the bullish momentum going, with buyers turning cautious in advance of the Federal Reserve (Fed) Chairman Jerome Powell’s look earlier than Congress later Tuesday.

The pair rose to 1.2177, the perfect degree due to the fact Jan. 25, and is presently buying and selling at 1.2166, representing a 0.11% obtain on the day.

While the 50-day Simple Moving Average (SMA), which currently capped gains, has been scaled, the breakout’s sustainability appears contingent on what Powell says about the rising Treasury yields and inventory market valuations.

The 10-year yield has risen to a 12-month excessive of 1.39% on Monday, taking the year-to-date acquire to over 35 groundwork points. While the bond market appears to be pricing an early Fed tightening, BK Asset Management’s Kathy Lien says the speak of taper is premature.

“We count on Powell to downplay the make bigger in fees and reiterate that accommodative financial coverage is wanted for the foreseeable future,” BK Asset Management’s Kathy Lien referred to in her every day market analysis.

Dovish remarks should invite more suitable promoting stress for the dollar, assisting EUR/USD set up a foothold above the 50-day SMA. Meanwhile, hazard aversion would grip markets if Powell expresses issues about the inventory market valuations, sending EUR/USD lower.

Aside from Powell’s testimony, the Eurozone Consumer Price Index for January, due at 10:00 GMT, should have an effect on the pair. Also, Germany’s sluggish vaccine shipping and feedback by using the European Central Bank head Christine Lagarde may additionally abate the pair’s growth on the greater side.

“Compared to US and UK, vaccine rollout in the Eurozone has been painstakingly slow. Germany, the greatest economic system in the Eurozone, has vaccinated solely 4% of its population. The vaccination fee in France, Spain, and Italy are barely lower,” Lien noted. Lagarde stated on Monday that the central financial institution is is “closely monitoring” nominal authorities bond yields in a signal of policymakers turning into uncomfortable with the latest surge in yields.

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