EUR/USD jumps to 3-week highs on Powell’s speech

The EUR/USD pair rose sharply from 1.1590 to 1.1639, hitting the highest level since August 2. The move took place amid a sharp decline of the US dollar following Jerome Powell’s speech at Jackson Hole.

The greenback tumbled across the board on a not hawkish speech from Powell. He mentioned that the Federal Reserve is not seeing overheating risks or signs that inflation is accelerating above its target. He repeated the message of gradual rate hikes. The euro rose following Powell’s comments, hitting fresh highs also against the Swiss franc and the pound.

The rally of EUR/USD was capped by the 1.1640. The upside bias remains intact but it moved away from the highs. It was trading at 1.1610/20, at the 55-day simple moving average, on its way to the highest close since August 1.

Key Levels to watch

To the upside, immediate resistance is seen at 1.1640 and above around the 1.1660 area, a downtrend line from June highs. A break above 1.1660 would expose 1.1700. On the flip side, a reversal might find support at 1.1580 and below at the strong 1.1520 (Aug 23 & 24 low / 20-day moving average). If the euro drops back below, the bearish pressure could accelerate.