EUR/USD faded the recent bounce from Powell’s speech during the Federal Reserve Economic Symposium, and the August low of 1.1696 is in play. The relative strength index sustains the bearish trend formed earlier.
Updates to the Statement on Longer-Run Goals and Monetary Policy Strategy pulled down the EUR/USD volatility as the wordings on the Fed’s mandate hardly showed any change from the earlier policy course. Chairman Jerome Powell in the update reiterated the Fed’s firm conviction in keeping the two Percent inflation target as ideal for promoting maximum employment and price stability.
The Fed Chair said that the adjustments to the framework would help to sustain a robust job market without causing an inflation outbreak. The FOMC, he added, would be focused on achieving inflation that averages two Percent in the long run.
He added that when the inflation has been running below two Percent, appropriate policy actions will be to target inflation above two Percent for some time. The FOMC seems not in a hurry to scale back its emergency measures, even if the committee discussed an outcome-based approach versus calendar-based forward guidance.
The ongoing Fed symposium indicates that FOMC will not tingle with the policy at the next interest rate decision on September 16, and this would be helpful for EUR/USD as the current approach is geared to add liquidity on an ongoing basis.
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