EUR/USD tumbles toward 1.0580 as DXY jumps on Fed Powell’s remarks

• Fed Powell: Ready to increase pace of rate hikes if incoming data suggests faster tightening is warranted.
• Markets see hawkish bias in Powell’s remarks, US Dollar soars.
• EUR/USD tumbles more than 50 pips.

The EUR/USD lost more than 50 pips after the release of Fed Chair Powell's remarks. The pair is trading under 1.0600, under pressure as the US Dollar soars across the board.

Fed Chair Jerome Powell said in his prepared remarks that the central bank is ready to increase the pace of rate hikes. He added that the strength of the economy suggests that the terminal rate will be higher than previously anticipated. "Long way to go on getting inflation back down, road likely to be bumpy”.

Powell is testifying on Tuesday in the US Congress in front of the Senate Committee on Banking, Housing and Urban Affairs. He is presenting the “The Semi-Annual Monetary Policy Report to Congress” and will take questions from lawmakers. On Wednesday, he will be back to testify in front of the House of Representatives Committee on Financial Services.

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Immediately after the release, the US Dollar jumped across the board and US yields rocketed. The US 10-year yield rose from 3.92% reaching levels above 4%, while the 2-year hit 4.97%, the highest since 2007.

EUR/USD dropped from near 1.0650 to as low as 1.0585, the lowest level since Friday. The next support is seen at 1.0560/65 and below attention would turn to February lows around 1.0530. A recovery above 1.0640 would alleviate the bearish pressure.

Volatility is set to remain elevated over the next minutes, with markets digesting Powell’s initial remarks and later, taking questions from lawmakers.

Technical levels