EURUSD will have to consider an earlier reduction of the US QE programme. The major currency pair reached stability on Wednesday after “rolling in rough weather” the day before. the current quote for the instrument is 1.1327. Yesterday, the US Fed Chairman Jerome Powell spoke in front of the banking committee of the US Senate and said that he thought that the US inflation was no longer temporary. In his opinion, the CPI growth may prevent the country’s economy from returning to full employment.
The labour market is also a concern for Powell: he is quite confused with a sideways trend in the working population employment and believes that it will take the labour market parameters more time to improve. Powell’s “hawkish” tone was surprising, because the Fed preferred to ignore the inflation boost earlier.
Since the CPI is currently too high, the regulator may consider closing the QE program several months ahead of the schedule. The Fed may consider this possibility during its next meeting. It means that the programme may be closed earlier than mid-2022, probably in April. As a result, the regulator may get back to the rate revision as early as May or June or even earlier. The FOMC’s “hawkish” stance appeared to be very strong. Powell will continue speaking in the Senate today and may say some more important things. In any case, everything he said prior to this moment was good for the “greenback”.