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The Euro has been constrained in several long and short-term channels which have guided the exchange rate lower since August 2017. The currency pair has been trading in a large-scale triangle after it touched the upper boundary on August 29.

The combination of the 55-,100-, and 200-hour SMAs was restricting the pair for making any bullish movement. Also, technical indicators suggest that bears' might grow stronger.

This bearish sentiment is likely to continue within the following trading session until it breach the weekly S1 at 0.8768.

As Jerome Powell's testimony's text was released on Tuesday, the US Dollar began its march of strength against the rest of the financial markets.

First target was reached upon the release of the testimony at 13:30 GMT, when the support line of the previously most dominant identified pattern on Dukascopy bank's hourly charts was touched.

However, the decline did not end there. As the head of the Fed spoke, the EUR/USD declined down to teh levels near the 1.2220 mark.

In regards to the future, from a technical perspective all previously notable supports are broken, and the 1.2150 mark might be reached next.

Due to large volatility caused by various events in the recent trading sessions a broader look has been taken at the GBP/USD currency exchange rate.

What was discovered first on the larger timeframes was that the pair is trading in a rather large scale descending channel pattern. The pair has bounced off this channel down pattern's upper trend line on 26th of February.

The event has resulted in the formation of a junior channel down pattern, which is guiding the pair lower at an even steeper angle.

In regards to the next trading session, the pair is set to meet the resistance of the junior pattern and test the support of the weekly S1 at the 1.3870 level.

Due to the fluctuations caused by Jerome Powell's testimony on Tuesday, which broke all previous junior and medium scale patterns, a broader look at the USD/JPY currency exchange rate is done.

In general, the pair has revealed a long term channel up pattern in the borders of the long ago spotted dominant descending channel. In addition, there is another notable pattern. As the pair rebounded against the ascending pattern's support, it formed an up trending pattern.

Meanwhile, on Wednesday the rate was set to meet with a strong support cluster near 107.0, which would propel it to test dominant resistance near 107.80.

After the massive drop caused by the appreciation of the US Dollar on Tuesday, the yellow metal's price traded sideways between two pivot point levels. However, it was about to continue the decline.

The reasons for such hypothesis are two. First is the fact that the metal has fully confirmed the breaking of the previous dominant channel up pattern. Second is the fact that the fall of Tuesday revealed a junior channel down pattern.

In general, the surge should occur, when the upper trend line of the junior pattern forces the commodity price lower through the support of the weekly PP, which is located at the 1,316.08 level.

The EUR/USD currency pair declined on the back of a stronger-than-anticipated CB consumer confidence report released on Tuesday. The Euro plummeted against the Greenback by 13 base points, or 0.11%, to the 1.2260 level.

The US consumer confidence strengthened over the course of February, surpassing the forecast by 4.6 points, following the downwardly-revised 124.3-point reading recorded in the prior month. Consumer confidence reached its highest mark since November 2000. The improvement in the aspect of labor force was the main reason for this boost, the Conference Board's Director of Economic Indicators Lynn Franco said. This move coincided with the positive Fed Chair Powell's testimony.

Durable goods orders report was one of the weakest currency triggers on Tuesday; in fact, it could not compete with the Fed Chair Powell testimony, making the overall sentiment hovering in limbo. The Euro fell against the Greenback by 12 base points, or 0.10%, however, bears stepped in half an hour earlier, pushing the price down to 1.2287 level.

The Commerce Department said that the US durable goods plummeted 3.7% for the month of January. The drop occurred because the demand for transportation equipment tumbled 10.0%, reaching a six-month low, following a 2.6% increase in the prior month. Technical analysts anticipated the EUR/USD pair to go up, however, the news from the Fed reversed the expectations.

While mainly maintaining the FOMC's stance, the new Fed Chair Jerome Powell's Congressional testimony before the House Finance Services Committee was interpreted as a hawkish one. Heightened speculations for three, or more, rate hikes this year were reflected in higher yields, the rise of the US dollar to highest in 3 weeks and pullback in risk assets, including equities. In short, Powell's assessment on US growth outlook was upbeat, describing growth and the employment market as strong. He also emphasized that fiscal policy, foreign growth, and financial conditions have turned from headwinds into tailwinds. Powell admitted that inflation remained low but affirmed that 'some of the shortfall in inflation last year', which were driven by 'transitory influences', should not repeat. On the monetary policy outlook, the new Chair reiterated the gradual path to normalization. Yet, he added the Fed would 'continue to strike a balance between avoiding an overheated economy and bringing PCE price inflation to 2% on a sustained basis". This appears to have signaled that the future rate hike path might steepen.

On economic developments, Powell noted that the US economy 'remains strong' as the Fed's reversal of some of the monetary easing has not dampened growth. He suggested that 'some of the headwinds the US economy had faced in previous years have turned into tailwinds', with 'fiscal policy' becoming 'more stimulative' and 'foreign demand' on the country's exports 'on a firmer trajectory'. Indeed, Powell noted in the Q&A session that he personally sees the economic outlook has strengthened since December. On inflation, Powell admitted that it has been 'low and stable', staying 'below the +2% rate that the FOMC judges to be most consistent over the longer run with our congressional mandate'. While continuing to attribute the soft price levels to 'transitory influences', Powell added that these 'influences' should not repeat this year.

What caught the most attention was his comment on the monetary policy outlook. According to Powell, the Fed would 'continue to strike a balance between avoiding an overheated economy and bringing PCE price inflation to 2% ". This appears to have signaled that the future rate hike path might steepen. Note that the last economic projections released in December, and hence the median dot plot for rate hikes, did not account for the latest budget agreement. How the members view the impact of tax cuts and federal spending on growth and inflation would be seen in March. It would be of high interest to see if the members would raise their growth and inflation forecasts next month. More importantly, would the revised (higher?) forecasts lead to expectations of a steeper rate hike path (four rate hikes in 2018?).

EUR/USD

Current level - 1.2212

The outlook is bearish, for a break through 1.2210, towards 1.2160, en route to 1.2090. Initial resistance lies at 1.2270 and crucial is 1.2350.

USD/JPY

Current level - 107.15

The outlook here is positive after yesterday's violation of 107.20, for a rise towards 108.30. Crucial on the downside is 106.75.

GBP/USD

Current level - 1.3890

The bias is bearish below 1.3930, for a break through 1.3850, towards 1.3760. Crucial on the upside is 1.4000.

XAUUSD (1317.52): Gold prices were seen closing on a bearish note as price slipped to an 11-day low. The declines mark the continuation to the downside with gold prices likely to test the next support level at 1303 region. A retest of this level could see support being established in the near term. Gold prices are likely to drift sideways following the retest of the support level near 1303. Further declines can be expected only on a close below this support level in which case, gold prices could see testing the next lower support at the 1282 region.