EUR/USD rebounds from multi-month lows, steadies around 1.0920
- ECB unlikely to change of treatment of house prices in inflation target.
- Lagarde says monetary policy should not be "the only game in town."
- US Dollar Index looks snap six-day winning streak.
The EUR/USD pair came under strong bearish pressure during the early trading hours of the European session and touched its worst level since early October at 1.0892 before staging a rebound. As of writing, the pair was trading at 1.0922, adding 0.12% on a daily basis.
ECB policy review
Citing several sources with knowledge of the matter, Reuters on Tuesday reported that the European Central Bank's (ECB) policy review was unlikely to address the issue of including house prices while determining the inflation target to trigger a short-lasting EUR selloff.
In the meantime, ECB President Lagarde reiterated that the slowing growth momentum in the euro area also weakened pressure on prices. "Inflation remains some distance below our medium-term aim," Lagarde added.
On the other hand, the USD struggled to preserve its strength on Tuesday as FOMC Chairman Powell refrained from providing any fresh clues on the policy outlook in his semi-annual testimony before the House Financial Services Committee of the Congress.
As pointed in the latest monetary policy report, Powell said the current policy stance was appropriate. "The Fed will respond accordingly if developments emerge to cause a material reassessment of the outlook," Powell repeated. The US Dollar Index, which registered gains for six straight days, lost its traction and was last down 0.12% on the day at 98.74, helping the pair recover its losses.
The European economic docket on Wednesday will feature the Industrial Production data. Later in the day, Powell will speak again on the second day of his testimony.
Technical levels to watch for