• EUR/USD bounces off intraday low, prints two-day winning streak.
  • Powell repeated cautious optimism, Fed’s readiness to extend monetary support in prepared remarks, Fed’s Bowman cites challenges for small firms.
  • EU, UK, Canada and the US join hands against Xinxiang human rights violations.
  • Housing, activity numbers can offer additional moves but words from Fed Chair Powell, Treasury Secretary Yellen will be the key.

EUR/USD cools down to the intraday low of 1.1930, before recently picking up bids to 1.1938, during Tuesday’s Asian session. The currency major snapped a three-day losing streak the previous day, amid a decline in the US Treasury yields, before recently easing from 1.1946. 

Having printed the heaviest losses in two weeks, US 10-year Treasury yields seesaw around 1.68% by the press time. The latest moves should have taken clues from the prepared remarks of Fed Chair Jerome Powell for today’s key testimony in front of the congress, together with Treasury Secretary Janet Yellen.

Although Powell repeated the Fed’s readiness to stay easy “as long as required”, challenges to the economic recovery and employment seem to have teased the bond bears. Also, Federal Reserve Governor Michelle W. Bowman’s comments suggesting further hardships for small businesses, despite the faster-than-expected US economic recovery, seem to challenge the sentiment.

Also, a collective Western drive to punish China over the Xinjiang human rights violation seem to have probed the previous risk-on mood. “Chinese individuals targeted over alleged human rights abuses in the far western region. China hits back with sanctions on 10 European individuals and four entities,” per the South China Morning Post (SCMP).

It should, however, be noted that the European Union’s (EU) readiness to talk vaccine plan with the UK jostles with the recent surge in the virus numbers and confuse market players.

Against this backdrop, S&P 500 Futures print 0.20% intraday gains while tracking Wall Street.

Moving on, EUR/USD traders will pay close attention to any clues of reflation fears and challenges to the future easy money policy in today’s testimony by America’s key policymakers. Also likely to entertain traders are US housing numbers for February and Richmond Fed Manufacturing Index for March.

Technical analysis

A short-term symmetrical triangle, currently between 1.1955 and 1.1875, restricts EUR/USD moves above the 200-day SMA level of 1.1860.

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