The EUR/USD pair is rising for the third day in a row on Wednesday with the greenback softer across the board as Fed Chair Jerome Powell testifies before the U.S. Congress. The EUR/USD pair has climbed to a 12-day high of 1.0605, but found resistance at the 20-day SMA and pulled back below the 1.0600 psychological level during the New York session.
The Federal Reserve is "strongly committed" to bringing down inflation from its highest level in 40 years, and policymakers are moving "expeditiously to do so," Powell said during his testimony before the U.S. Senate Banking Committee,
"It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all."
Fed Chair stressed that the central bank is “not trying to provoke a recession,” although he acknowledged that a recession was “certainly a possibility” against the current global backdrop. From a technical standpoint, the EUR/USD pair's short-term outlook has improved somewhat but remains tilted to the downside. The price failed to break above the 20-day SMA, currently at 1.0611.
In the daily chart, the RSI has gained an upward slope but remains below its midline, while the MACD shows decreasing red bars, signaling dwindling selling interest.
On the upside, a break above the 20-day SMA could give the EUR/USD some upward momentum to test a descending trendline drawn from February’s highs currently standing at the 1.0670 zone. A move above this latter would expose June highs at the 1.0770-80 area.
On the other hand, immediate support could be faced at 1.0470, followed by the 1.0400 psychological level and then the cycle lows at around 1.0349.