EURUSD remains positive despite Powell’s more hawkish-than-expected comments

EURUSD is consolidating within a narrow range on Thursday morning, following a strong rally on Wednesday (up 0.65%), and remains constructive despite Wednesday’s upside rejection and a bull-trap above the converged 10/20DMA’s.

The single currency rallied on weaker-than-expected US May CPI numbers, though the sentiment was tempered by more hawkish-than-expected remarks from Fed Chair Powell.

US policymakers expressed satisfaction with the positive signals from easing inflation and the resilient economy heading towards a soft landing. However, they remain cautious about actions on interest rates, which will continue to be data-dependent.

The daily chart shows improving conditions after Wednesday’s close above the top of the daily cloud generated an initial bullish signal, which will seek verification on a repeated close above the cloud.

However, 14-day momentum remains in negative territory, and near-term action is weighed down by Wednesday’s bull-trap. This is expected to impact the action as long as the price stays below the 1.0835/40 zone (converged 10/20 DMA’s / 61.8% Fibonacci retracement of 1.0915/1.0719). Increased downside risk is expected if the price falls below 1.0800/1.0785 (psychological level / daily cloud top / 200DMA).

US weekly jobless claims and the May Producer Price Index will be in focus today as key economic events.

Res: 1.0817; 1.0840; 1.0852; 1.0869
Sup: 1.0800; 1.0785; 1.0765; 1.0734