The EUR/USD has maintained its recent recovery from three-month lows.
Concerns about China’s slowing economy frighten investors, lifting the dollar.
Weaker yields, fueled by Powell, protect the downside ahead of new US data.
As the US dollar attempts a rally amid worsening market sentiment, the EUR/USD is oscillating between gains and losses, maintaining the recent recovery over 1.1800.
In light of growing fears about the Delta covid variant contagion and slowing Chinese economic development, the greenback licks its wounds, finding some support from risk-off sentiment. In Q2, the Chinese economy grew by 7.9% year on year, falling short of the 8.1 percent growth forecast.
The main currency pair fell to 1.1772 on Wednesday, its lowest level since April, amid a broadly firmer US dollar, as hotter inflation data fueled Fed hawkish views. However, after Fed Chair Jerome Powell poured cold water on hopes of monetary policy normalization in the American session, EUR/USD produced an astonishing bounce.
Powell said in his congressional testimony that the end of monetary policy support is still a long way off because the economy has not yet recovered. Traders are now looking forward to Day 2 of Powell’s testimony for more trade opportunities.
Meanwhile, a flood of US macro news and broader market sentiment will have a considerable impact on the major, as the downside is still cushioned by Treasury yield weakening.”
For the EUR/USD bulls to target a 200-SMA level of 1.1985, a clear breach of the 1.1860 figure, which comprises the wedge’s upper line, is required. Meanwhile, pullbacks will bring the 1.1800 round figure back to the chart before testing the support line of the bullish pattern, which is around 1.1765 “Anil Panchal, an analyst at FXStreet, notes./n
