The euro rose on Friday afternoon and updated its weekly highs today during the Asian session, but then returned to large support levels in the absence of major players.
The speech of the Fed Chairman exerted pressure on the US dollar, as Powell did not criticize the recent statements of US President Donald Trump. Let me remind you that the US President stated at the beginning of last week that it is necessary to "slow down" the further increase of interest rates since the competitiveness of the US dollar against other currencies is significantly reduced.
Speaking at a conference in Jackson Hole, Powell said that there is a good reason to expect that the US economy will continue to remain strong, and therefore, a gradual process of normalization remains appropriate. Powell also noted that, despite this, economic activity in the US declined, and productivity should grow faster yo have a significant increase in revenue.
The Fed Chairman drew attention to the fact that estimates by the committee of natural unemployment and a neutral level of interest rates are not accurate.
As for inflation, Powell is confident that fixing inflationary expectations is vital for the Fed, and the committee will do whatever it takes if inflation becomes a threat.
Pressure on the US dollar resumed after Powell said he did not see an increased risk of overheating the economy, and further gradual tightening of the policy would remain appropriate only after the strong growth of incomes and employment continued.
Speeches of other Federal Reserve representatives moved into the background and did not have an impact on the markets.
For example, the president of the Federal Reserve Bank of Cleveland, Loretta Mester, said that a steady growth in interest rates in the United States. In her opinion, the Fed has strong arguments in favor of tightening monetary and credit policy. Last week, a number of managers from the reserve banks, advocated the further increase in interest rates and approaching the neutral level.
As for the technical picture of the EUR/USD pair, buyers need a breakthrough of a large resistance of 1.1630 to resume growth. Only from there, demand for risky assets will resume again, which will lead to the preservation of the current uptrend with the update of the highs of 1.1700 and 1.1745.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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