- EUR / USD drifts slightly lower in Asia, now trading in the red near 1.1820.
- Caution ahead of Powell’s speech Thursday dampens business activity, according to Reuters.
- The Fed chief is expected to signal a tolerance for high inflation.
Buying interest around the single currency weakened on Wednesday and pushes EUR / USD lower. The pair is currently trading at 1.818, which is a drop of 0.125 on the day, after hitting a high of 1.1844 on Tuesday.
Attention before Powell’s speech
Federal Reserve Chairman Powell is expected to open the Kansas City Fed’s annual economic policy conference on Thursday with an update on how the central bank plans to adjust monetary policy to boost inflation against a backdrop Coronavirus pandemic that pushed the US economy into recession.
Powell is generally expected to signal his willingness to allow inflation to rise above normal for a period of time. Such a change in strategy will likely strengthen inflation expectations and weigh on the greenback. However, with conciliatory expectations built in, the chances of disappointment are high. This uncertainty seems to have instilled caution in the market ahead of the event.
The pair could continue to trade in Monday’s 1.1784-1.1850 trading range over the coming day. The European data calendar is empty, however, the United States is ready to report data for durable goods orders at 12:30 GMT. The pair may therefore experience some volatility during US trading hours. The European Central Bank’s Schnabel speech at 11:30 GMT is not expected to lead to big moves in the single currency.