EUR/USD climbs towards 1.0350s on dovish Powell speech
- The Euro climbed as the Federal Reserve Chair, Jerome Powell, took the stance.
- Fed’s Powell: “Makes sense to moderate pace of interest rate hikes.”
- Fed’s Powell opened the door for a 50bps rate hike in the December meeting.
The EUR/USD jumped from weekly lows of 1.0290 as the Federal Reserve (Fed) Chair Jerome Powell acknowledged that moderation in the speed of interest rate increases might come as soon as the next meeting. That said, the Euro (EUR) is climbing, while the US Dollar Index (DXY) turned negative, dropping 0.42%. At the time of writing, the EUR/USD remains volatile, trading within 1.0300/1.0380, as Powell continues.
In some of his remarks, Fed Chair Jerome Powell said it “Makes sense to moderate pace of interest rate hikes,” adding that it could happen as soon as the December meeting. He said that the Federal Reserve has made substantial progress towards a “sufficiently restrictive policy,” though he added that there’s “more ground to cover.”
Powell added that rates are more likely to rise “somewhat higher” than what policymakers estimated at the September meeting. He emphasized that rates would need to be higher “for some time.” The Fed Chair reiterated that inflation remains “far too high,” and even though the October CPI report was a “welcome surprise,” he needs more evidence that inflation is actually “declining.”
Also read: Breaking: Fed chair Powell speech sends US Dollar lower
EUR/USD Market’s reaction
The EUR/USD initially dropped to 1.0307 and rallied sharply, towards 1.0376, still below the daily high of the day at around 1.0399. It should be noted that the 200-day Exponential Moving Average (EMA) sits around 1.0372, and so far, US Dollar (USD) buyers leaned on it, stalling the rally around the 1.0370 area.