EURUSD looks ready to expand Wednesday’s gains as the dollar remains on a bearish trend, because of the Fed President Jerome Powell’s, dovish tone on inflation. The pair is currently trading at 1.2234, representing a 0.15% gain on the day, having printed a bullish close on Wednesday.
Fed President Powell said on Wednesday that there are important disinflationary pressures worldwide, and inflation will delay to rise above the 2% target. The Fed predict a sluggish rise in inflation, but it is also dedicated to keeping interest rates low for sometime after inflation crosses above 2%. Therefore, rate hikes are unlikely to happen anytime soon, even though markets are betting on a swift global recovery on potential coronavirus vaccines.
On the 4-hour chart, we see that the pair’s strong rally continued in the overnight session. The EUR/USD remains above the important support level of 1.2175. Consequently, the path of least resistance is still higher, with the next main target being at 1.2250. The termination point for this trade will be at 1.2175. On the economic announcements front, the focus would be on the US weekly jobless claims and the Building Permits figure scheduled for release today. The final print of the Eurozone November Consumer Price Index will be released at 10:00 GMT.
The trend remains bullish with a test of the 1.2250 resistance and thereafter to the 1.2300 price livel.
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