The euro has initially fallen a bit during the trading session on Tuesday, but then turned around to show signs of strength as Jerome Powell testified in front of Congress. The Federal Reserve is going to remain rather accommodative, so that does weigh upon the greenback in general, and the euro is considered to be the “anti-dollar”, so it makes sense that we would see this market push to the upside.
The 1.20 level would be an area of interest as well, as it was previous resistance and support. The 1.20 level will attract a certain amount of attention, and as a result will grab some headlines. If we can break above there, then it is likely that we would go looking towards the 50-day EMA, which is currently at the 1.2076 level. On the other hand, if we were to turn back around and break down below the last couple of candlesticks, it is likely that we could go looking towards the 1.17 level underneath where there had been a significant amount of support as well.
The euro is getting thrown around by the Federal Reserve, as they have recently suggested that perhaps tapering and maybe even interest rate hikes were coming sooner than anticipated. That had money running towards the greenback, and as a result it makes sense that we would continue to see the market fall until the Federal Reserve started to walk back some of its comments. In fact, it took almost no time at all to get the Federal Reserve to talk about the fact that tapering, or rate hikes, were not necessarily coming soon, and try to calm down everybody in the markets. This has been the case for quite some time, as the Federal Reserve has been trained by Wall Street not to tighten monetary policy under any circumstances. With this, Jerome Powell is testifying in front of Congress with a decidedly dovish tone, and that should continue to work against the greenback overall, with the euro very likely to try to get to the top of the overall range which is closer to the 1.2250 area. Ultimately, this is a market that could be a bit noisy, but it clearly looks as if it favors the upside suddenly.
