Euro Drops Against Dollar, Spikes Higher on Powell Speech, Later Falls

The euro fell against the resurgent US dollar ignoring in-line euro area releases, as US Treasury yields remained stable during the first half of today’s session. The EUR/USD currency pair spiked higher during Jerome Powell‘s speech but later fell despite the Fed chair reiterating the bank’s accommodative stance.
Today the EUR/USD currency pair rose to a high of 1.2180 in the early Frankfurt market before falling to a low of 1.2135 in the American session and was near these lows at the time of writing.
The positive investor sentiment supported the currency pair’s initial rally, but this did not last as the greenback posted gains pushing the euro lower. The release of the in-line Italian industrial production report for December by Istat had a muted impact on the pair. The inline eurozone inflation report for January released an hour later could not stop the euro’s descent. According to Eurostat, the eurozone’s final inflation print was 0.2%, as was expected. Investor sentiment was further affected by Christine Lagarde‘s comments yesterday that the ECB closely monitors government bond yields.
The fibre spiked higher as Jerome Powell testified before the US Senate reiterating the Federal Reserve’s accommodative policy stance. Powell said that the Fed is not concerned with inflation levels despite the rising US Treasury yields, which he admitted were driven by inflation expectations. He insisted that the country has to overcome the coronavirus pandemic.
The currency pair’s future performance is likely to be affected by tomorrow’s German GDP report and US dollar dynamics.
The EUR/USD currency pair was trading at 1.2144 at 17:40 GMT after falling from a high of 1.2180. The EUR/JPY currency pair was trading at 127.79, having dropped from a high of 128.04.
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Original from: www.earnforex.com