EUR/USD soars to test 1.1800 as USD tumbles after Powell’s speech

• US dollar tumbles on immediate reaction to Powell’s speech.
• EUR/USD rises toward 1.1800, adds to weekly gains.

The EUR/USD reversed sharply from 1.1734, jumping to 1.1798, after the release of Fed Chair Powell's speech at the Jackson Hole Symposium. His words triggered a decline of the US dollar across the board.

Powell sends a signal that the Federal Reserve could start tapering its purchase program this year. According to him, the economy has made “clear progress” toward Fed’s goals for removing stimulus.

The DXY reached weekly lows near 92.70, equity markets moved to the upside and US yields turned lower. Metals rebounded significantly with XAU/USD testing $1,800/oz.

The decline of the dollar boosted the EUR/USD that is about to test the 1.1800/05 area. A break higher could lead to more gains. The next resistance stands at 1.1830 followed by 1.1845.

Technical levels