EUR/USD Is Under Pressure After Hawkish Signals From Powell

Vladimir Zernov
Published: Jan 27, 2022, 08:01 GMT+00:00

EUR/USD settled below the support level at 1.1230 and is testing the next support at 1.1200.


In this article:

Euro Is Losing Ground Against U.S. Dollar

EUR/USD is currently trying to settle below the support at 1.1200 while U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance level at 96.70. In case this test is successful, the U.S. Dollar Index will head towards the 97 level which will be bearish for EUR/USD.

Recent comments from Fed Chair Jerome Powell indicated that the Fed was ready to raise rates aggressively to fight inflation. In addition, the Fed is ready to reduce the size of its balance sheet, which can push Treasury yields higher.

Currently, the yield of 2-year Treasuries is trying to settle above the 1.20% level. Just a few days ago, the yield of 2-year Treasuries was near the 1.00% level. Higher yields provided material support to U.S. dollar, which managed to get strong upside momentum. In case yields continue to move higher, the American currency will get more support.

Foreign exchange market traders will likely remain focused on Fed policy outlook in the upcoming trading sessions. The Fed is the key driver for markets right now, and the U.S. dollar has a good chance to move higher in this environment.

Technical Analysis

eur usd january 27 2022

EUR/USD is currently testing the support level at 1.1200. In case this test is successful, EUR/USD will move towards the next support which is located at 1.1170.

A move below the support at 1.1170 will open the way to the test of the support at 1.1150. If EUR/USD declines below this level, it will head towards the next support level at 1.1120.

On the upside, the previous support at 1.1230 will serve as the first resistance level for EUR/USD. In case EUR/USD manages to settle above this level, it will head towards the next resistance at 1.1270. A successful test of the resistance at 1.1270 will push EUR/USD towards the resistance at 1.1300.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

Did you find this article useful?