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EUR/USD Rallies, Retreats Later on Powell Comments

May 13, 2020 by

EUR/USD was rising during Wednesday’s trading session and continued to move higher after the release of the disappointing US Producer Price Index. But the currency pair has reversed its movement quickly afterward and is now trading below the opening level. The reason for such a drastic change of performance was the speech of Federal Reserve Chairman Jerome Powell who rejected the idea of negative interest rates. (Event B on the chart.)

PPI dropped by 1.3% in April, more than two times the forecast decline of 0.5%. The index fell by 0.2% in the preceding month. (Event A on the chart.)

US crude oil inventories dipped by 0.7 million barrels last week, though they were still 11% above the five-year average for this time of year. That was a total surprise to market participants who were expecting a drop by 4.1 million barrels. The stockpiles increased by 4.6 million barrels the week before. Total motor gasoline inventories decreased by 3.5 million barrels, though they still were 9% above the five-year average. (Event C on the chart.)

If you have any comments on the recent EUR/USD action, please reply using the form below.

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