UR/USD reverses and jumps toward as US Dollar plummets on Powell’s words

• EUR/USD at six-day highs following the FOMC meeting. 
• US Dollar turns negative on Powell’s press conference, DXY tumbles as Wall Street soars. 

The EUR/USD bounced sharply from the 20-day moving average at 1.1075, rising more than 50 pips. It broke above 1.1130 and reached a 6-day high at 1.1149. As of writing, it stands near the top, holding a bullish tone. 

After the FOCM meeting, the Greenback dropped across the board, pushing EUR/USD toward the 1.1070/80 support. As expected, the central bank cut the key interest rate but signaled a pause ahead, triggering a modest rally of the US Dollar. 

During Powell’s press conference, the Greenback lost strength and then reversed sharply after the Chairman mentioned there won’t be a rate hike unless there is a significant move up in inflation. His comments boosted equity princes in Wall Street and sent the US Dollar to fresh lows across the board. 

“Assuming no deterioration in the international outlook (read U.S.-China trade tensions), we believe the central bank will stay on the sidelines for the foreseeable future. This morning’s GDP report seemed to support such a stance from the Fed, as consumers remained resilient in the face of slowing business investment”, considered analysts at the National Bank of Canada. At Wells Fargo, economists also see the Fed on hold in December, but they look for one more 25 bps rate cut early next year. 

 EUR/USD Levels 

The outlook continues to favor the upside in EUR/USD after the rebound from the 20-day moving average. Also, it is holding above 1.1120 (previous resistance, now immediate support). The next level to watch is the 1.1155 area that if broken, would expose last week highs at 1.1177. 

The bullish tone is likely to remain intact as long as the Euro holds above 1.1100/05 (horizontal level / 20-SMA in four hours chart); below the 1.1070/80 continues to be a crucial barrier.