**A Comprehensive Analysis of the FX Market after Jerome Powell’s Speech: Technical Levels and Market Outlook**
*Inspired by Marc Chandler’s analysis on Seeking Alpha*
The foreign exchange (FX) market experienced significant moves in the aftermath of Federal Reserve Chair Jerome Powell’s latest policy speech, setting the tone for currency trading across major pairs and emerging market currencies. Powell’s comments, alongside developments from other central banks and shifting economic data, have intensified market scrutiny regarding monetary policy outlooks and technical price patterns. This article delves deeper into the global FX market dynamics after Powell’s speech, reviews key technical levels, and integrates perspectives from other authoritative sources for a robust market outlook.
**Key Themes in Powell’s Speech and Their FX Impact**
Jerome Powell’s speech reiterated the Federal Reserve’s commitment to data dependency, emphasizing patience regarding interest rate cuts in light of still-elevated inflation. The speech was scrutinized for clues on the timing and scale of potential monetary easing. The key takeaways included:
– The Fed is maintaining a cautious and patient stance toward lowering rates.
– No indication of an imminent rate cut; the focus remains on incoming economic data.
– Inflation continues to run above the 2 percent target, warranting vigilance.
– Job market strength persists, giving the Fed more flexibility to wait before easing.
These statements reinforced the US dollar’s standing as a high-yielding and relatively safe haven, influencing traders’ positioning in the major FX pairs.
**US Dollar Index (DXY) Technical Picture**
Following Powell’s speech, the US Dollar Index (DXY) reflected a modest recovery after prior weakness. Key elements in its technical setup include:
– **Resistance:** The region between 104.50 and 105.00 has acted as formidable resistance, stalling upward momentum. A break above could bring the March highs near 105.90 into focus.
– **Support:** Short-term support sits near 103.80, with a more significant base at the 200-day moving average, currently around 103.20.
– A directional break will likely require more decisive macroeconomic data or Fed commentary.
**Euro (EUR/USD): Testing Ranges and Sentiment Shifts**
The euro saw modest gains against the dollar after Powell’s remarks but remains within a broader consolidation range shaped by the European Central Bank’s (ECB’s) dovish tilt and mixed eurozone data.
– **Resistance:** EUR/USD faces resistance at 1.0900 and then at 1.1000, where previous rallies were capped.
– **Support:** The 1.0800 mark serves as near-term support, with a deeper layer at the 200-day average near 1.0780.
– ECB President Christine Lagarde’s own communications suggested rate cuts are likely in the near term, albeit cautious given inflation’s stickiness.
Marc Chandler notes in his analysis that the euro’s underlying technical tone is constructive, but momentum is lacking without fresh drivers.
**Japanese Yen (USD/JPY): Y
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