EUR / USD and GBP / USD unchanged on this day
The hype for Powell’s speech was huge. He especially delivered too; moving to an average inflation target will have major implications if inflation goes above 2%.
At the same time, the short-term implications are small, and even less so if you think inflation will stay low. What we’ve seen is that the market is trying all kinds of different ideas today. We’ve seen quick rallies and sales in just about everything. Where did he leave us? There is some AUD / JPY strength and the USD / CAD might crash, but the general story is undecided.
A look at EUR / USD and GBP / USD (among others) shows a large doji candle right in the middle of the range.
I tend to see this as the continuing education of a head and shoulders high, but nothing looks like confirmation.
What makes me believe that a great movement is taking place is the narrative uncertainty of today. There isn’t a lot of conviction in what’s going on in the field or even in the FX trading paradigm. This will lead traders to soften larger moves, before finally capitulating.