Many traders yesterday awaited remarks from Federal Reserve Governor Michelle Bowman. However, her speech, which focused on banks, AI, and cryptocurrencies, hardly had a serious impact on the currency market.
According to Bowman, banks and regulators must harness the benefits of new technologies such as artificial intelligence and cryptocurrencies, or risk reducing their relevance in the economy. "Change is coming," Bowman said in prepared remarks for a blockchain symposium in Wyoming. "Ideally, regulators should allow new uses of blockchain to expand in ways that benefit the banking system," she added. "If we fail to follow this approach, we risk the banking system becoming less significant for consumers, businesses, and the economy overall."
This message, backed by her experience on the Fed's Board of Governors, sounded like a call to rethink traditional approaches in the financial sector.
With the development of artificial intelligence, banks can optimize lending processes, assess risks more accurately, and provide personalized financial services. Ignoring these opportunities could lead to a loss of competitiveness, as more agile and technologically advanced companies capture market share.
Cryptocurrencies, despite their volatility and regulatory uncertainty, represent a new asset class that would be shortsighted to ignore. They offer opportunities for international payments, innovative financial products, and greater financial inclusion.
It is therefore unsurprising that Bowman urged the industry to help regulators better understand blockchain and digital assets, as well as the potential of new technologies in addressing issues such as fraud. She also stated that she would seek to limit regulatory oversight linked to reputational risks and suggested the possibility of developing new rules.
Earlier, the Fed and other banking agencies promised that their examiners would no longer treat reputational risk as part of supervisory reviews, following calls from some banking groups and Republican lawmakers to end a practice critics considered unfair. "I would also encourage the industry to engage with regulators to help us understand blockchain and its potential for solving other problems," she said, adding: "I am committed to changing our culture and approach to the adoption and integration of technology, new products, and services."
Although Bowman did not directly address interest rates, the dollar continued to strengthen against several risk assets after her remarks. The cryptocurrency market, meanwhile, saw another major sell-off.
Technical Outlook for EUR/USD Buyers need to reclaim 1.1670 to open the way toward a test of 1.1700. From there, the pair could climb to 1.1730, though doing so without support from large players will be quite difficult. The furthest target stands at the 1.1768 level. On the other hand, only near 1.1625 do I expect significant buying activity. If none appears there, it would be better to wait for a retest of the 1.1600 low or consider opening long positions from 1.1565.
Technical Outlook for GBP/USD For pound buyers, the nearest resistance is at 1.3530. Only a breakout above this level would allow targeting 1.3560, though breaking through higher will be rather difficult. The next target stands at 1.3590. On the other hand, bears will attempt to reclaim 1.3480. If they succeed, a breakout of this range would deal a serious blow to bullish positions and push GBP/USD toward 1.3445, with prospects of reaching 1.3405.
