EUR/USD catching a bid in a minor correction to 50-D SMA

• EUR/USD heads through 50-hr SMA on dollar weakness.
• EUR/USD breaks descending resistance line.

EUR/USD is turning up the gas as we progress through the NY session with the DXY capped by the 55-D MA at 90.91 ahead of the 18 Jan high of 91.04. Currently, EUR/USD is trading at 1.2211, up 0.09% on the day, (boosted by a less hawkish outcome from Powell's testimony than Tuesday's) having posted a daily high at 1.2223 and low at 1.2154.

After a better bid session on the back of The Institute for Supply Management saying its manufacturing index rose to 60.8% in February, up from 59.1% in January, to reach the highest level since May 2004 as well as PCE prices, the Fed’s preferred measure of inflation that increased to 0.3% over the month, (unchanged at 1.5% on year-to-year basis), and also US initial claims plummetting to a 48-year low of 210k, the US Dollar has now come off its 6-week highs of 90.90 in the DXY.

Powell not committing to 4 rate hikes, not seeing signs of significant wage inflation

The weakness comes in at the time of writing during the second part of Powell’s testimony that has now concluded where markets were looking for a potential less hawkish Powell this time around.

Commenting on wages, Powell said he sees "no signs of significant wage inflation," in a statement adding that  4 rate hikes this year comes under the definition of "gradual". Despite saying greater confidence that the US will grow above trend he will not commit to the 4 hikes and instead says a faster pace of Fed tightening remains to be seen and that it is hard to tighten aggressively with inflation below target; Dollar comes off its highs.

EUR/USD levels

• EUR/USD heads through 50-hr SMA on dollar weakness.
• EUR/USD breaks descending resistance lone.

The price remains below the daily 10 and 21 SMAs and daily double top while consolidating below the 50-D SMA here and the overall picture is a consolidation of the broad-based bullish trend. The recent correction in EUR/USD heads through 50-hr SMA on dollar weakness and the descending resistance line, pointing to a neutral outlook for the meantime. A break back below the January 18 low at 1.2165 and today's low of 1.2154 opens risk towards the 2017-2018 uptrend at 1.2044. To the upside, 1.2330 needs to be broken with positive closes above it for a run to 1.2380 through the 21-D SMA, (1.2339).