Forex Signals Brief Feb 11: FED’s Powell Could Rattle Stock and Forex Markets
Today Jerome Powell will testify at Congress, which could send markets either way, depending on the FED’s outlook as trade tariffs kick in.
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Market activity remains heavily influenced by political developments, with traders closely monitoring any updates on Trump’s stance on tariffs and tax policies. This dynamic has led to periods of sharp fluctuations followed by extended phases of consolidation. Today’s U.S. trading session was largely subdued, with market participants awaiting multiple Trump interviews ahead of his expected decision on reciprocal tariffs, set to be announced today and tomorrow.
Despite the overall calm, equity markets showed strength, particularly in technology stocks. Nvidia led the gains with a 6% surge, preventing the Nasdaq from closing lower, while Palantir advanced by 5%. European stocks followed suit, with the UK FTSE 100 and Germany’s DAX each climbing nearly 1%, both closing at record highs. Meanwhile, McDonald’s (NYSE: MCD) saw a 4.5% jump after reporting earnings before the market opened, indicating a strong investor response. In other developments, tensions around Elon Musk’s legal battle with OpenAI continue to escalate, with his investor group reportedly preparing a $97 billion bid to take control of the company.
Meanwhile, currency markets saw the U.S. dollar trade in a choppy fashion, ultimately edging higher in North American trading. A cooler NY Fed inflation expectations survey offered a counterpoint to the University of Michigan survey, though it had little immediate market impact. Amid the broader market movements, gold hit an all-time high of $2,911 on Wednesday, fueled by investor demand amid ongoing tariff concerns. Although it struggled to hold above the $2,910 level, a $45 rally kept it well within reach of new highs.
Today’s Market Expectations
President Trump has announced that “reciprocal” tariffs will be introduced on Tuesday or Wednesday, though they will not take effect immediately. Market reaction has been mixed—S&P 500 futures (Spoos) initially dropped 30 points but quickly rebounded, while the U.S. dollar’s rally lost steam. Investors are increasingly viewing these tariffs as political posturing rather than concrete economic measures, but a clearer assessment will be possible once further details emerge.
Powell’s Testimony & Fed Policy Uncertainty
Federal Reserve Chair Jerome Powell is scheduled to present the Fed’s semiannual report to Congress, addressing the Senate on Tuesday and the House of Representatives on Wednesday. Since September, the Fed has cut interest rates three times, responding to post-pandemic inflation cooling toward the 2% target. However, inflation progress has stalled in recent months, leaving policymakers uncertain about the potential impact of Trump’s existing and proposed tariffs on future price pressures.
Trump and Powell have previously clashed over interest rate policy, with Trump criticizing the Fed for keeping rates too high. However, in a surprising reversal, Trump endorsed the Fed’s recent decision to hold rates steady, contradicting his earlier calls for further cuts.
The contrasting price movements of gold and cryptocurrencies highlight the mixed sentiment in financial markets. Gold continues to climb as investors seek a safe haven amid uncertainty, while Bitcoin and Ethereum struggle with resistance and volatility. Traders are closely monitoring key technical levels and macroeconomic developments to anticipate the next major market shifts.
Gold Prepares for the Next Push Toward $3,000
Gold continues to attract safe-haven demand, breaking past the $2,900 level today and reaching a record high of $2,910 after a $45 spike. The metal has now gained for six consecutive weeks, benefiting from a mix of trade tensions, inflation concerns, and broader macroeconomic uncertainty. Looking ahead, interest rate policy will remain a key driver for gold’s trajectory, especially if the Fed moves toward rate cuts in 2025, potentially weakening the U.S. dollar and impacting both nominal and real interest rates.
XAU/USD – H4 Chart
EUR/USD Continues to Make Lower highs
The EUR/USD exchange rate has been in a steady downtrend since October, shedding around 10 cents over this period. However, recent weeks have seen some stabilization, with short-lived rallies above 1.05 in January and above 1.04 last week. Despite these attempts at recovery, buying momentum remains weak, and the pair continues to post lower highs, indicating that bearish sentiment still dominates. The European Central Bank’s increasingly dovish stance has further pressured the euro, reinforcing the downward trend. If this trajectory persists, EUR/USD could edge closer to parity, especially if U.S. economic resilience and Federal Reserve policy keep the dollar supported in the near term.
EUR/USD – Daily Chart
Cryptocurrency Update
Bitcoin Stays Below $100K
Meanwhile, Bitcoin and Ethereum show diverging price action. Bitcoin has remained relatively resilient despite recent market turbulence, trading in a narrow range. Technical indicators, such as multiple doji candlesticks on the daily chart, suggest a potential bullish reversal. Bitcoin also tested the 100-day SMA, which could serve as strong support. If bullish momentum builds, Bitcoin could break above $110,000, with a potential run toward $120,000 if the upcoming U.S. CPI inflation report meets expectations.
BTC/USD – Daily chart
Ethereum Snaps A Small Gain
Ethereum, however, has struggled to maintain its gains. After briefly approaching $4,000 in late 2024, it faced strong selling pressure, leading to a sharp decline. A flash crash on Monday sent Ethereum down to $2,000, wiping out half its value, before seeing a slight rebound. Selling pressure remains high, but if technical support holds near $2,000 and market sentiment improves, Ethereum may still have room for recovery.
ETH/USD – Daily Chart
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