EUR/USD: The recent slip seems like a correction before the next move higher

EUR/USD has retreated from the highs after US yields resumed their gains. All eyes are now on Jerome Powell, Chair of the Federal Reserve, who testifies before Congress later in the day and may propel the euro higher. Meanwhile, the technical picture looks bullish, FXStreet’s Analyst Yohay Elam briefs. 

Key quotes

“Fed Chair Powell testifies before Congress and markets are eagerly awaiting his comments on the Fed's bond-buying scheme. Does the bank continue seeing the current increase in yields as a healthy sign of vaccine-led growth down the road? Dismissing these recent moves would hurt stocks, which need low-interest rates to thrive. On the other hand, if Powell says the Fed is ready to push yields lower, concerns of overheating and inflation may cause the bank a new headache.”

“Erring on the side of caution will likely push the greenback lower, allowing EUR/USD to hit new highs. However, even Powell's power has its limits.”

“Euro/dollar is benefiting from significant upside momentum on the 4-hour chart and trades above the 50, 100 and 200 Simple Moving Averages. Moreover, the Relative Strength Index is below 70, outside overbought conditions.” 

“Resistance awaits at the daily high of 1.2180, followed closely by 1.2190, a peak earlier in the year, and then 1.2220.”

“Support is at the daily low of 1.2140, followed by 1.2110, which is a separator of ranges and also where the 50 and 200 SMAs hit the price.”