FED Chair Jerome Powell Testifying Before U.S. Senate.
The dollar was able to recover some of the losses it uncured in the wake of Jerome Powell's testimony before the U.S. Senate yesterday. Check out our last EURUSD analysis to get a better sense of where the greenback stands at present.
In his highly-anticipated testimony, FED Chair Jerome Powell was questioned by the U.S. Senate on a number of pressing matters, including inflation and climate change. This caused an upsurge in volatility on all pairs involving the greenback.
When asked whether the FED is ready to introduce "draconian" measures if necessary to tame rising inflation, Powell responded by stating that if all things go as expected, the FED will reduce its accommodative policy stance and asset purchases throughout the year. These comments, coming just hours before the release of the December CPI numbers, temporarily jolted the greenback.
EURUSD 2H Price Chart. Image source: Trendsharks ©, created with TradingView.com
As can be seen on the 2H chart above, the pair's price action continues to be consolidating in a tight range spanning between the major resistance level at 1.13850 and the major support at 1.12850. The range-trading environment in the short term is confirmed by the fact that the ADX indicator has been threading below the 25-point benchmark since the 30th of December.
Given that the Stochastic RSI indicator is currently threading in its overbought extreme, there is a high probability for another reversal from the upper limit of the consolidation range in the near future.
This is made even more evident by the fact that the latest upswing is taking the form of a 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. It appears that the pattern has already completed its third and final impulse leg, which would likely be followed by a corrective movement. Currently, this appears to be the case as the dollar recovers following Powell's take on inflation.
The Road Ahead Towards Policy Tightening
Testimony by Chair Powell at his nomination hearing: https://t.co/QpkJWbJMLz
— Federal Reserve (@federalreserve) January 11, 2022
Watch Live: https://t.co/3vWyIgcjlh
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