empty
15.12.2023 01:35 PM
Jerome Powell changed his rhetoric, and the dollar couldn't withstand it

The EUR/USD pair on Thursday experienced growth to the corrective level of 61.8% (1.0960) and solidified above it. Such a strong rise in the European currency was caused by the information background on Wednesday and Thursday. It turned out that traders were not prepared for Jerome Powell's comments and new stance. Christine Lagarde's speech only added fuel to the fire. Thus, the process of the euro's rise may continue towards the next level at 1.1035. The consolidation of the pair's exchange rate below the level of 1.0960 will work in favor of the American currency, with some decline toward the Fibonacci level of 50.0% (1.0862).

This image is no longer relevant

The wave situation has become not more complex but less appealing. We are accustomed to market movements proceeding fairly smoothly, so any sharp rise or fall causes panic among all traders and analysts. The last upward wave has overlaid all previous waves. The trend has changed to "bullish" at the moment, but now practically any downward wave will not be able to change it back to "bearish." For the resumption of the "bearish" trend, the euro needs to fall by 250–300 points. The euro has soared, and now what will its landing be like?

Jerome Powell has been regularly stating for a long time (all the last months) that the process of tightening monetary policy is not complete. He repeatedly drew the market's attention to the fact that inflation remains very high, speaking about rate cuts prematurely, and the Federal Reserve could raise the rate at any moment by one or even two more times. However, on Wednesday evening, he unexpectedly stated that rates would be lowered next year, and this statement alone could cause a total collapse of the US dollar. If the talk is now about rate cuts, decisions on hikes will not be made. Powell said, "Rate hikes are unlikely."

Yesterday, Christine Lagarde "added fuel to the fire," unlike Powell, who did not talk about easing monetary policy next year. The situation now is as follows: is the Federal Reserve ready to start lowering rates, and is the ECB not? Powell's abrupt change in rhetoric is a reason to get rid of the dollar. Maintaining Lagarde's hawkish position is also a reason to get rid of the dollar.

Is there hope for the dollar to rise now? In my view, expecting a strong rise in the US currency in the near future is not advisable. If the ECB signals its readiness to start easing early next year, then the dollar will start having a trump card in hand. Right now, it can only count on a corrective rise.

This image is no longer relevant

On the 4-hour chart, the pair has made a reversal in favor of the European currency and consolidated above the 50.0% Fibonacci level at 1.0957. This consolidation allows counting on the continuation of growth towards the next corrective level at 38.2% (1.1032). No imminent divergences are observed in any of the indicators today. The "bullish" trend continues, but a bounce off 1.1032 or a close below 1.0957 will allow bears to regain some of the lost positions over the past two days.

Forecast for EUR/USD and trader recommendations:

This image is no longer relevant

What can be advised to traders in the current situation? Further growth of the euro today is unlikely. The euro will find it extremely difficult to find support in business activity reports due today in the EU and Germany. I believe that the pair may rise to the level of 1.1035 on the hourly chart, but it will be very difficult for it to climb higher. Upon consolidation below the level of 1.0960, I advise opening sales with a target of 1.0862 on the hourly chart. On a rebound from the level of 1.1035, I also advise selling the pair.

Samir Klishi,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Trading Signals for EUR/USD for March 26-28, 2025: sell below 1.0808 (21 SMA - 8/8 Murray)

According to the H4 chart, the euro appears oversold, and we believe that if EUR/USD finds strong support around the 8/8 Murray level at 1.0742 or 1.0690, it will

Dimitrios Zappas 15:13 2025-03-26 UTC+2

Trading Signals for GOLD (XAU/USD) for March 26-28, 2025: sell below $3,034 (21 SMA - 7/8 Murray)

Gold could continue its bearish cycle in the coming days. To confirm the downtrend, we should expect consolidation below 3,020, then the price could reach the 6/8 Murray at 2,968

Dimitrios Zappas 15:11 2025-03-26 UTC+2

Forex forecast 26/03/2025: EUR/USD, GBP/USD, Gold and Bitcoin

Useful links: My other articles are available in this section InstaForex course for beginners Popular Analytics Open trading account Important: The begginers in forex trading need to be very careful

Sebastian Seliga 10:35 2025-03-26 UTC+2

EUR/USD. March 26th. Bears Preparing for a New Attack

On Tuesday, the EUR/USD pair once again rebounded from the support zone of 1.0781–1.0797, but the bulls showed weakness due to the lack of a supportive news background. Today

Samir Klishi 10:32 2025-03-26 UTC+2

GBP/USD. March 26th. Inflation May Move the Pound

On the hourly chart, the GBP/USD pair continued to trade sideways on Tuesday, showing no reaction to the 1.2931 level. Therefore, a new close above or below this level will

Samir Klishi 10:29 2025-03-26 UTC+2

Technical Analysis of Intraday Price Movement of AUD/JPY Cross Currency Pairs, Wednesday March 26, 2025.

It can be seen on the 4-hour chart that the AUD/JPY cross currency pair is moving in a Bullish channel harmoniously and is above the EMA (21) which also

Arief Makmur 09:34 2025-03-26 UTC+2

Technical Analysis of Intraday Price Movement of Nasdaq 100 Index,Wednesday March 26, 2025.

20405.7 With the appearance of Convergence between the Nasdaq 100 index price movement and the Stochastic Oscillator indicator and the price movement of the index moving above the EMA (21)

Arief Makmur 09:34 2025-03-26 UTC+2

EUR/USD and GBP/USD March 26 – Technical Analysis

As the week begins, bearish players are trying to confirm and extend the prevailing downtrend, but they have yet to achieve strong results — The pair continues to stay close

Evangelos Poulakis 04:26 2025-03-26 UTC+2

EUR/USD. March 25th. A Dull Week Ahead

On Monday, the EUR/USD pair rebounded from the 200.0% Fibonacci retracement level at 1.0857, reversed in favor of the U.S. dollar, and declined toward the support zone of 1.0781–1.0797

Samir Klishi 18:04 2025-03-25 UTC+2

GBP/USD. March 25th. The Pound Moves Into a Sideways Range

On the hourly chart, the GBP/USD pair consolidated above the 1.2931 level on Monday, but the bulls failed to sustain the upward move and retreated. The pair subsequently moved back

Samir Klishi 17:58 2025-03-25 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.