The EURUSD has been trying to recover since Tuesday after falling to a more than two-month low below $1.19 on Monday following the Fed's change in tone last week. The euro took advantage of a dovish tone from Jerome Powell yesterday before a House of Representatives subcommittee to continue its rebound and climb back to $1.1950.
The Fed chairman yesterday stressed that the central bank would not raise interest rates too quickly out of fear of future inflation and that the central bank would keep its eyes on a broad set of labor market statistics.
As Jerome Powell has reiterated on multiple occasions, the Fed's monetary policy will depend heavily on the recovery of the labor market. Therefore, the upcoming monthly jobs report released on Friday, July 2 should be particularly important for the markets. A better than expected reading would be an argument for faster monetary policy normalization and vice versa.
In terms of technical analysis, the outlook for the EURUSD is once again bullish in the short term as the exchange rate has formed an “inverted head and shoulders” reversal pattern by breaking above its resistance at $1.1922, paving the way for a continued rebound to $1.20.
(Chart Source: Tradingview 23.06.2021)
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