EUR/USD plummets down to 1.1270s on Fed’s Jerome Powell “time to retire transitory” from inflation
- EUR/USD collapsed from 1.1370s down to 1.1240s on Jerome Powell’s hawkish remarks against the US Senate Committee on Banking and Housing.
- Fed’s Powell: “I will talk about speeding up taper at the coming Fed meeting.”
The EUR/USD plummeted during the New York session, on Federal Reserve Chairman Jerome Powell, remarks against the Senate Committee on Banking and Housing.
Market reaction on Fed’s Chair Jerome Powell remarks
At the beginning of the Q&A session, the EUR/USD pair was trading around the 1.1370s but plummeted to 1,1240s on remarks of Jerome Powell.
Jerome Powell said that higher prices are related to supply-demand issues, reiterating that price increases have spread more broadly. He further noted that the risk of higher inflation has increased and commented that it is time to retire the word Transitory when talking about elevated prices.
Regarding a faster QE’s reduction, he said that it is “Appropriate to consider wrapping up taper in a few months sooner.” Further noted that he “will talk about speeding up taper at the coming Fed meeting.” He added that recent data showed elevated inflationary pressures, rapid labor market improvement, and strong spending.
When he was asked about the COVID-19 omicron variant, he said that he “will know within a week or 10 days, can only assess the impact on the economy then.”
EUR/USD Price Forecast: Technical outlook
The 1-hour chart leaves us with a 130 pip sizeable bearish candle on the remarks of retiring the “T” word for inflation. The price plunged through the R3, R2, R1, central daily pivot, S1, and found support around the S2 area at 1.1233, where it bounced towards 1.1270.
At press time, EUR/USD bulls are having a tough time, trying to break above the 200-hour simple moving average (SMA) at 1.1270. Meanwhile, EUR/USD bears, on the other side, are battling the 100-hour SMA at 1.1261, at the confluence of the S1 daily pivot.
On the way up, the first resistance would be the central daily pivot point at 1.1286, followed by the 50-hour SMA at 1.1300, and November 29 high at 1.1311. On the flip side, the S1 daily pivot at 1.1261 would be the first support, followed by the S1 daily pivot at 1.1233 and then the S3 pivot at 1.1208.