EUR/USD: Probing key resistance at 1.1370, focus on Powell’s testimony

• EUR/USD is looking to cut through the crucial resistance at 1.1370 ahead of the German Gfk consumer confidence.  
• The breakout, however, could be short-lived if Fed’s Powell sounds hawkish during his Congressional testimony.  

EUR/USD may rise well above 1.14 if Powell talks dovish during his testimony despite the recent optimism on trade.  

The common currency picked up a bid near 1.1330 yesterday, but the ensuing gains were capped near $1.1370 – a level which has acted as strong resistance since Feb. 20.  

That key hurdle is level is being probed at press time and could be breached if the German Gfk consumer confidence, due at 07:00 GMT, blows past expectations.  

That said, the sustainability of gains depends on what Fed’s Powell says during his Congressional testimony.  

The dollar may pick up a strong bid, sending EUR/USD back to 1.13 if Powell takes note of the US-China trade optimism. However, if Powell reiterates patience and talks about the downside risks to the economy, then the dollar will likely take a beating. In that case, EUR/USD will likely rise above 1.14.  

It is worth noting that a big move is overdue, as four months of range bound action has pushed implied volatility readings down to levels seen in November 2017.  

Technical Levels