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  • EUR/USD trades flat, having failed to take out 50-day SMA on Wednesday.
  • Fed chairman Powell’s dovish comments fail to inspire dollar selling.
  • ECB’s Lagarde uses strong words to describe Eurozone’s low inflation situation, capping EUR’s gains.

EUR/USD struggles to extend recent gains in the wake of dovish comments by Federal Reserve chairman Jerome Powell.

In prepared remarks for a webcast to the Economic Club of New York on Wednesday, Powell said that the job market is far from fully recovered and that the Fed isn’t considering raising interest rates from the current near-zero levels.

Such comments typically attract offers for the US dollar. However, this time, the dollar bears have remained on the sidelines (at least till now). EUR/USD is currently trading unchanged on the day near 1.2120, having faced rejection at the 50-day Simple Moving Average (SMA) resistance above 1.2140 on Wednesday.

Indeed, the recovery rally from Friday’s multi-week low of 1.1952 looks to have stalled. Likely playing the spoilsport is the European Central Bank Governor Christine Lagarde’s take on inflation. On Wednesday, Lagarde said that inflation is unlikely to move toward the bank’s 2% target over the medium term, indirectly hinting at a prolonged monetary easing. “This is more dovish than their comments last month when they suggested that they may not need to use the full PEPP envelope if financing conditions remained favorable,” Lien noted.

Looking forward, a continued rally signaled by technical indicators could remain elusive courtesy of Eurozone’s slow vaccine delivery and potential risk-off due to rising bond yields. The data calendar is light on Thursday, with just US weekly jobless claims scheduled for release at 13:30 GMT.

Technical levels