The EUR/USD is in focus as Fed Chairman Powell is expected to testify in front of the US Congress tomorrow at 10 am EST. The June 2019 minutes of the Federal Open Market Committee (FOMC) will also be released the same day at 2 pm EST. These events are likely to impact the EUR/USD, which has opened the week under pressure.
What to Watch Out For in the US Dollar
The US Dollar has gained strength in the last three trading days on the back of a better-than-expected Non-farm Payrolls report as well as reduced odds of a 0.5% interest rate reduction by the Fed Reserve.
The Euro has also been weighed down by speculations and comments by important players within the European Central Bank, that the bank could resume a new round of quantitative easing and interest rate cuts. Christine Lagarde’s nomination as the person to take over the reins of the ECB in September has reinforced what many believe to be the bank’s dovish stance. Lagarde, the outgoing IMF Chief, has previously praised outgoing ECB President Mario Draghi’s commitment to battling economic downturns in the EU. Considering that the last monetary stimulus measures undertaken by the ECB were under Draghi’s watch, some have interpreted this to mean that Lagarde will be more dovish than hawkish during her tenure.
Presently, the EUR/USD has been testing the 1.1200 – 1.1205 price area and has failed to breach it to the upside. The EUR/USD is expected to trade in a tight range that extends from the intraday/July monthly low of 1.1192, to daily highs of 1.1205 – 1.1210, as traders wait for tomorrow to get further direction on this pair.