EUR/USD: Euro Stabilizes Above $1.08 After Powell Speech Knocks Dollar Value

Forex markets digested Powell’s speech before Congress as he noted inflation is coming down but more data is needed.

• The EURUSD pair was floating fairly unchanged early Wednesday morning with traders still digesting a speech by Federal Reserve Chair Jay Powell. The single European currency was stable near $1.0820, hugging the flatline for the week with a little bounce after the Fed boss delivered comments on interest rates and the way forward. Some of his remarks were a positive surprise to markets but not to the US dollar.
• Powell told Congress that the US has made progress on tackling stubborn inflation but Fed officials needed “more good data” before moving to cut interest rates. Moreover, the workforce, the central banker said, has “cooled considerably” and cautioned that high rates could derail the economy and push it into a downward spiral of unemployment. On the other end, an early rate cut risks reigniting inflation.
• Overall, the US dollar was on the losing side of things yesterday as investors cheered Powell’s comments on rate trims and flocked to risk assets. One currency pair remained resilient in its journey to higher grounds. The USD/JPY marched toward 161.50 and is on track to wrap up the third consecutive day of gains. In other news, inflation data for June is on deck for Thursday — expect elevated volatility and trading opportunities.