Euro alternates gains with losses around the 1.0920 region.
Stocks markets in Europe extend the weekly decline early on Wednesday.
The cautious trade prevails ahead of key testimony by Powell.
The risk-off mood continues to weigh on the risk complex.
Further recovery remains in place for the greenback.
As the markets opened in Europe on Wednesday, the EUR struggled to make gains, causing the EUR/USD pair to remain around the low-1.0900s. This lack of direction could be attributed to investors' caution ahead of Chief J. Powell's semiannual testimony before Congress later in the day.
Market participants anticipate a hawkish message from Powell during this key event. It's worth noting that at the June FOMC event, rate setters indicated a possibility of resuming the tightening campaign in July, with projections pointing towards two more 25 bps rate hikes or a 50 bps raise.
While Powell's testimony takes centre stage on Wednesday, the markets are also closely monitoring the likely next decisions on interest rates by both the Federal Reserve and the European Central Bank (ECB).
There are no data releases scheduled in the euro zone on Wednesday, but the usual weekly MBA Mortgage Applications and the API's weekly report on US crude oil stockpiles are due across the Atlantic.
Daily digest market movers: Euro looks at Powell for near-term direction
Pre-Powell cautiousness continues to favour the US Dollar.
Powell’s testimony is expected to fall on the hawkish side.
Sticky UK inflation prompts extra tightening by the BoE in H2 2023.
China, recession concerns maintain the risk appetite subdued so far.
The FX universe continues to monitor the ECB-Fed divergence.
Technical Analysis: There is still room for a move to 1.1000
EUR/USD seems to have met some decent contention around the 1.0900 neighbourhood so far this week. In order to continue its upward momentum, the EUR must quickly surpass the monthly high at 1.0970 (June 16) to potentially allow for a test of the psychological barrier of 1.1000. Further resistance levels include the 2023 high of 1.1095 (April 26), the round level of 1.1100, and the weekly high of 1.1184 (March 31, 2022), which is supported by the 200-week SMA, currently at 1.1181.
In the event that the bears take control, there is an interim contention at the 55-day SMA at 1.0880. Should this level be breached, there are no significant support levels until the May low of 1.0635 (May 31), followed by the March low of 1.0516 (March 15) and the 2023 low of 1.0481 (January 6)
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