EUR/USD Moves Up After Fed Chair Powell Statement
- EUR/USD jumps over 70 pips, or 0.60% on Wednesday after Powell commentary
- Fed Chair Jerome Powell says the US economy has made progress toward Fed’s goals
EUR/USD Moves Up
The EUR/USD currency pair climbed on Wednesday after Federal Reserve Chairman Jerome Powell gave his remarks on the state of the economy, the looming inflation, and the timing of trimming asset purchases.
Moments after the US central bank announced it will leave interest rates unchanged near zero while maintaining the current monetary policy program unchanged, the US dollar advanced across the board. A sharp move in the EUR/USD brought the exchange rate lower by 40 pips immediately after the announcement.
Over the next hours, however, the pair changed direction and turned higher to finish its third straight day in the green. The EUR/USD pair on Wednesday closed at 1.1843, a few pips away from its daily session high of 1.1849.
The euro dropped as low as $1.1770 before bulls stepped in and pushed the pair higher by roughly 70 pips, or 0.6% so the EUR/USD could reach a two-week high.
Fed Chair Sees US Economy Progress
Fed Chair Powell’s statement on the economy was largely anticipated by currency traders. In his speech, Mr. Powell provided needed insights into the expected path toward reducing the $120bn in monthly asset purchases. Jerome Powell’s comments also highlighted current inflation pressures and offered some guidance on the Fed’s goals of maximum employment and stable prices.
Concluding a two-day FOMC policy meeting, Mr. Powell said the US economy has made “progress toward these goals” and the Federal Reserve is soon expected to begin discussions over when and by how much Fed officials intended to dial down their bond-buying program.
On the topic of inflation, Chair Powell said that there is a “possibility that inflation could turn out to be higher and more persistent than we expect,” as he referred to the recent inflation figures way above Fed’s target of 2%. Consumer-price inflation for the month of June increased 5.4% from a year earlier, the biggest monthly gain since August 2008.
Following the press conference by the Fed Chair, the US dollar had a mixed performance across the board. The GBP/USD logged its third consecutive session of gains, while the USD/CAD and the USD/CHF declined 0.60% and 0.45%, respectively.
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