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EUR/USD: On a downward trajectory, Powell's testimony eyed

  • EUR/USD's recent slide from 1.1095 to 1.09 has put the bears in a commanding position. 
  • Fed Chairman Powell to speak to Congress Tuesday and Wednesday. 
  • The focus will be on Powell's take on coronavirus fallout. 

EUR/USD is operating on slippery grounds, having dropped for the sixth straight trading day on Monday. 

The single currency made a lower high near 1.1095 on Feb. 2 and has been falling ever since. 

Bears in control

The pair formed a red "marubozu" candle last week, which comprises a long body and little or no wicks. The candle indicates a strong bearish sentiment. 

The bearish follow-through seen so far this week has validated the marubozu candle. The pair 1.0958 to 1.0908 on Monday and is currently trading near 1.0910. 

Focus on Powell's testimony

Federal Reserve (Fed) chief Jay Powell will testify before Congress on Tuesday (15:00 GMT) and Wednesday. 

With the global economy bracing for a potential slowdown tied to the novel coronavirus outbreak, the markets are expecting Powell to sound dovish. 

That alongside low inflation has motivated markets to price in one and a half-rate cuts by year-end.

As a result, if Powell downplays the impact of coronavirus, the bid tone around the US dollar will likely strengthen, sending EUR/USD to three-year lows below 1.079. 

Apart from Powell's testimony, the pair may also take cues from the European Central Bank head Christine Lagarde's appearance at the European Parliament in Strasbourg at 2 pm. 

Technical levels

 

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