In his speech to the US Congress yesterday on monetary policy, Federal Reserve Chairman Jerome Powell once again noted the steady recovery of the world's leading economy from the effects of the COVID-19 pandemic. At the same time, Powell called the successful process of vaccination of the United States population from the coronavirus and the unprecedented steps in monetary policy taken by the agency led by him as the main reasons for the economic recovery. Regarding inflation, the head of the Federal Reserve stressed that it would soon return to the regulator level at 2%, and this will happen after the normalization of some temporary factors, particularly about supplies. Thus, Powell again identified the increased inflationary pressure as a temporary factor and said that the Fed would not resort to preventive rate hikes in the near future. Powell cited high employment as another reason not to raise rates yet. To summarize, the Fed chief returned to his previous rhetoric, based on the fact that increased inflation is a temporary factor. Powell also said that many efforts still need to be made to restore jobs, which the American economy missed during the exacerbation of COVID-19.
The main fundamental events of the day will be the indices of business activity in the manufacturing and services sectors of the eurozone and the United States. The release time and forecasts for these and other indicators can be found in the economic calendar.
Daily
It is not what market participants expected from the speech of the head of the Fed. Investors had hoped that Powell would again use more hawkish rhetoric during his speech to the US Congress, which would allow them to hope for an early increase in interest rates. Since this did not happen, the US dollar was under pressure and declined across many markets. In particular, the main currency pair of the Forex market continued a corrective pullback at yesterday's trading, as a result of which it reached the broken orange 200-exponential moving average and the lower border of the Ichimoku indicator cloud. Now the most interesting question is what will happen next. Will the reversal candlestick pattern "Bullish Absorption" continue to be worked out, or will the pair complete the corrective pullback and move on to the resumption of the downward trend? It is necessary to close trading within the daily cloud of the Ichimoku indicator, the lower limit of which is at 1.1968. If the euro bears get down to business again, their priority will be to break through the support at 1.1880, where the minimum values of yesterday's trading were shown.
Trading recommendations for EUR/USD:
In connection with the still unclear continuation of trading on the main currency pair, it makes sense to consider both positioning options while the priority remains for sales. I recommend you to look closely at opening short positions after a short-term rise in the price zone of 1.1965-1.1985 and the formation of bearish candle signals there on smaller time intervals. The same tactic should be used for purchases after a decline in the support area of 1.1880. Sales targets 1.1900-1.1890. The reference points for purchases are 1.1960 and 1.1980.
